TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
R E M E D I E S
January 6, 2015
Note from the transcribers: Always double check the
provisions copied here with your RECENT codals. There
might be amendments not found online that are
substantial.
Provisions on the remedies will cover both remedies of the
government as well as the remedies on the part of the taxpayer in
the event there is a finding (and a notice) of deficiency.
So from Title VIII we have the remedies, we have Title X the
statutory bases of the penalties in the NIRC. Now remember that
the Tax Laws are not penal or criminal in nature. However, youll
notice that the tax laws provide for penalties for violations of the
NIRC. Nevertheless, despite the provision of the violations and
penalties, still our tax laws are not criminal or penal in nature.
Now, what is the reason for the penalties, either fine,
imprisonment or both? They are there to ensure prompt payment
of taxes. Again, we go back to the principle that taxes are the
lifeblood. So if taxpayers would violate or did not comply with the
statutory requirements, then the corresponding violation will have
its consequence whether they will be subject to a fine,
imprisonment or both. But still, it did not make our tax laws
criminal or penal in nature. They are just there to ensure prompt
payment of the tax.
From the penal provisions, you have Title XI, allotment of the
internal revenue. So the provisions under title XI provide for how
the coffers or the revenues related from taxes under the NIRC,
how they will be allotted. The money generated from taxation will
go to the national treasury and the distribution and allotment even
if they are provided for by law, still requires a standing general
appropriations act because congress will source the requirements
of the GAA from the revenues or taxes collected. Now, some of
the taxes collected under the NIRC are allotted to certain offices
for a special purpose, and that is provided for under Title XI.
And then you have the oversight committee. This is the
Congressional Committee wherein the Commissioner, the
Department of Finance, to report in cases of leakages under our
statutory provisions. When they find that makalusot ang taxpayer
dito, mukhang may leakage itong statutory provision, so they go
back to Congress to plug the holes, to plug the leakages in the
NIRC. And Congress will make a corresponding remedial statutory
provision to guide, or correct the holes in the NIRC. So thats the
purpose of the Congressional Oversight Committee. They will
report also to the Department of Finance as long as the
Commissioner will report to the Congress.
There is also what we call compliance. These are still tax laws, but
this is what is the extent of compliance on the part of the
taxpayers. For sure, there is no such thing as 100% compliance.
In fact, 50-60% only pay the correct taxes. If you read reports of
the Department of Finance to Congress, the annual reports,
whether taxpayers have compliance, because what the
government would like to pursue is that there is an increased
compliance; otherwise, whats the use of taxes. We already have a
substantial set of tax laws - the NIRC, the tariff anc customs code.
But is the BIR, or the BOC serious in the compliance, compelling
taxpayers WON they have complied with the tax laws in order to
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
generate more revenues for the government. Again, we go back to
the principle fiscal adequacy - that the tax laws are able to expand
or contract thru the relieves of the government. So since taxes are
the lifeblood of the government, the government has to deliver
services,pay salaries, pay for public works, so saan pa kukuha ang
gobyerno kundi dito sa taxes, fees and charges. The bulk of the
governments revenue is generated from taxation.
So you have also Title XIII repealing provisions of our tax laws and
then finally Title XIV.
What is important here is the provisions of Title VIII, the
remedies. So we go back noh.
Now, for purposes of assessment, taxes are classified as either
self-assessing or non-self-assessing taxes. Most of the taxes under
the NIRC are what we call self-assessing. Why? Because it is the
taxpayer who is the one who determines his tax liability.
1. He files a tax return
2. And pays the tax on the basis of such return
ILLUSTRATIONS:
You file an income tax return, and pay on the basis of such a
return
When you go to estate tax, the survivors, the estate of the family,
or the administrator or executor, files a tax return or declares all
properties belonging to the estate, deductions allowed, computes
the net taxable estate and computes the estate tax due on the
basis of the NTE.
When we go to donors tax, the donor files the tax return, declares
the gift donated during the calendar year, and computes the tax
due cumulatively and credits all the taxes that have been paid in
the previous days, and the net amount is the one in the return. So
self-assessing, the donor is the one who computes and pays.
Then we go to VAT. Still, its still the business, the VAT or non-VAT
registered taxpayer who is the one who will file the VAT or non-
VAT returns, or percentage tax returns., and pays the tax on the
basis of sales, or taxable receipts due, or output less input tax,
and places it in the returns on time, whether monthly or quarterly
returns.
Then you also have the percentage tax or the non-VAT returns,
wherein still the taxpayer determines the liability, the gross
receipts that have been paid and pays the tax on the basis of such
a return.
Then you go to the excise tax, on the basis of the ad valorem or
specific taxes. Manufacturers or importers file a return and pay the
tax on the basis of the return filed, either on the basis of ad
valorem or specific tax.
Then you have the doc stamps. Still, it will be the taxpayer who
will file this return, the doc stamp whether it is a simple document,
you secure the doc stamp and affix that on the document and
make the corresponding tax preparations in order that the stamp
wont be ____, then that is compliance. But for greater amounts,
we have the documentary stamp tax return, so we have the deed
of sale. So you will secure a 15-denominations(?) stamp.
Otherwise, the entire document or the deed of sale will be covered
with stamp. So what you will do is file a doc stamp return,
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
declare the taxable value of the transaction or the document and
pay the tax on the basis of that return. Still, self-assessing.
So youll notice the taxes you pay and the returns you file under
the NIRC are self-assessing. It is the taxpayer who determines the
liability.
Now, the opposite is non-self assessing (NSA). When the taxes are
NSA, the taxpayer cannot determine the liability. For example is
the case of real property tax, in RPT, there are 2 valuations that
are considered.
1. FMV of real property
2. Assessed value of property
So the FMV can be determined by the taxpayer. But there are
times when the FMV of the taxpayer will be caught in conflict with
that of the assessor. SO thats a controversy. And the assessed
value, is the:
FMX x the assessment level
The taxpayer would not know the assessment level and the RPT is
determined on the assessed value x rate. So in the case of RPT,
this is the type of the tax that is NSA because the taxpayer cannot
determine:
1. FMV because there is a schedule of FMV also, as
determined by the assessors office.
2. Assessed value
Kaya may tinatawag tayong RPT (real property tax) declaration,
because that document would be the assessment of the assessor
to determine the FMV and the assessed value, so that the
treasurers office, the FMV and the assessed value, this is the job
of the assessor. And the determination of the real property tax
trabaho ng local treasurer. The local treasurer can now determine
the tax liability once he has the real property tax declaration which
has been approved and consented by the assessors office.
Another is the customs duties, they are also NSA because they
imported without knowing the dutiable value of the articles
brought. So the dutiable articles are declared before customs. The
importer or the customs brokers makes an import entry declaring
what are the taxable imported articles, the carrier, which brought
in the articles, then raised a declaration how much these articles
were acquired abroad. So in the course of the importation, the
taxpayer or the importer or the customs broker, would not know
the dutiable value, that is the job of the BOC, thru the collector of
customs. So you have another example of NSA. Once the dutiable
value is paid, the collector will compute now the duties that will be
assessed on the importer. The importer will be notified of the
assessment then the director or the customs broker pays the
assessment made by the director of customs. Once the permit is
granted, then the articles can be released from the premises of
the BOC.
So we have these set of taxes from the point of view of
assessment, the self-assessing and the non-self-assessing.
Going back to the self assessing taxes. So the taxes under the
NIRC are self-assessing, these do not give an assurance that the
returns filed by the taxpayer are accurate. So these returns will be
subject to a process called an assessment. While they are self-
assessing, it does not follow that when you file the return, it is
correct. How will the government know now na tama yung finile
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
niyo? So your returns now will be subject to an assessment, so
this assessment will undergo an examination and audit.
ASSESSMENT
Now the assessment and audit will be an investigation of the
returns and it is not only the returns that are examined and
investigated. It will go to the roots the business records,
receipts, documents, purchases, etc. to know whether the income
or amount you have declared is accurate. Otherwise, if it is not
accurate, then, you will be subject to (or notified of) a deficiency
finding. So, the assessment therefore covers 2 parts:
1. It covers a period- 203.
SEC. 203. Period of Limitation Upon Assessment and
Collection. - Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding in
court without assessment for the collection of such taxes shall be
begun after the expiration of such period: Provided, That in a case
where a return is filed beyond the period prescribed by law, the
three (3)-year period shall be counted from the day the return was
filed. For purposes of this Section, a return filed before the last
day prescribed by law for the filing thereof shall be considered as
filed on such last day.
Because there is a prescriptive period within which the
government is allowed to make an assessment, it cannot be
forever. Otherwise, it will be very taxing, the payment. So the
government is given only 3 years from the deadline. Remember
the returns have deadlines. When you talk of income tax, the
deadline for purposes of the assessment is the annual return.
Taxpayers who are engaged in business or in the practice of a
profession file quarterly, but the determination of the 3 year
period is not reckoned on the quarterly return because they
operate only as the payment of taxes in advance or a system of
withholding. The final determination of the tax due is determined
on annual return, and your deadline, whether individual or
corporate is on the 15th day of the 4th month following the end of
the taxable year. So from the end of that period from the filing of
the return (so sabihin nating Apr 15), so from april 16 + 3 years,
that is the prescriptive period within which the government can
assess your taxes.
By way of exception, there is another period provided for in:
SEC. 222. Exceptions as to Period of Limitation of Assessment and
Collection of Taxes.
(a) In the case of a false or fraudulent return with intent to
evade tax or of failure to file a return, the tax may be assessed, or
a preceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which has become final and executory, the fact
of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof.
The government is given 10 years within which to make an
assessment to determine a finding WON there is a deficiency.
Another exception is where you have the imprescriptibility of the
assessment:
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
SEC. 223. Suspension of Running of Statute of Limitations. - The
running of the Statute of Limitations provided in Sections 203 and
222 on the making of assessment and the beginning of distraint or
levy a proceeding in court for collection, in respect of any
deficiency, shall be suspended for the period during which the
Commissioner is prohibited from making the assessment or
beginning distraint or levy or a proceeding in court and for sixty
(60) days thereafter; when the taxpayer requests for a
reinvestigation which is granted by the Commissioner; when the
taxpayer cannot be located in the address given by him in the
return filed upon which a tax is being assessed or collected:
Provided, that, if the taxpayer informs the Commissioner of any
change in address, the running of the Statute of Limitations will
not be suspended; when the warrant of distraint or levy is duly
served upon the taxpayer, his authorized representative, or a
member of his household with sufficient discretion, and no
property could be located; and when the taxpayer is out of the
Philippines.
As a rule, there is a prescriptive period. However, by way of
exception, there is another period to collect (10 years), but with
more reason for an exception under 223, there are instances
where the assessment is imprescriptible or will not prescribe.
So as a rule, there is a period within which the government
determines if there is a finding of deficiency.
2. The other contemplation of the assessment is that it
contemplates a notice. This is the notice sent to the
taxpayer of a deficiency finding.
Now this notice of a deficiency finding should be done within the 3
year period. Otherwise, if the notice was sent outside of the 3 year
period, then assessment has prescribed. Now, this notice of
assessment is regulated by:
SEC. 228. Protesting of Assessment. - When the Commissioner or
his duly authorized representative finds that proper taxes should
be assessed, he shall first notify the taxpayer of his findings:
provided, however, That a pre-assessment notice shall not be
required in the following cases:
(a) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax as appearing on
the face of the return; or
(b) When a discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding
agent; or
(c) When a taxpayer who opted to claim a refund or tax credit of
excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
(d) When the excise tax due on exciseable articles has not been
paid; or
(e) When the article locally purchased or imported by an exempt
person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or transferred
to non-exempt persons.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
The taxpayers shall be informed in writing of the law and the facts
on which the assessment is made; otherwise, the assessment shall
be void.
Within a period to be prescribed by implementing rules and
regulations, the taxpayer shall be required to respond to said
notice. If the taxpayer fails to respond, the Commissioner or his
duly authorized representative shall issue an assessment based on
his findings.
Such assessment may be protested administratively by filing a
request for reconsideration or reinvestigation within thirty (30)
days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations.
Within sixty (60) days from filing of the protest, all relevant
supporting documents shall have been submitted; otherwise, the
assessment shall become final.
If the protest is denied in whole or in part, or is not acted upon
within one hundred eighty (180) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the lapse of one
hundred eighty (180)-day period; otherwise, the decision shall
become final, executory and demandable.
This is where the law provides that the assessment is not only a
demand to pay the deficiency tax, but the assessment should have
the facts and the law on which the deficiency finding is based. So
the finding of deficiency, you will not send a demand letter to the
taxpayer, you must notify of the taxpayer through an assessment
notice that there is a finding of deficiency on the basis of these
facts, and on the basis of these law or even jurisprudence that
there a finding of deficiency. Otherwise, if there is no compliance
that it should state the facts and the law to which the deficiency is
based, then you could challenge the validity of the assessment
that it is null and void.
Now, so during this period, you have REVENUE REGULATION
12-29 provides for the procedural aspect on how this assessment
is done:
REVENUE REGULATIONS NO. 12-99
SUBJECT : Implementing the Provisions of the National
Internal Revenue Code of 1997 Governing the Rules on
Assessment of National Internal Revenue Taxes, Civil Penalties and
Interest and the Extra-judicial Settlement of a Taxpayer's Criminal
Violation of the Code Through Payment of a Suggested
Compromise Penalty
TO : All Internal Revenue Officers and Others
Concerned
SECTION 1. Scope. Pursuant to the provisions of Section
244 , in relation to Section 245 of the National Internal Revenue
Code of 1997, these Regulations are hereby promulgated to
implement the provisions of Sections 6 , 7 , 204 , 228 , 247 , 248
and 249 on assessment of national internal revenue taxes, fees
and charges and to provide the rules governing the extra-judicial
settlement of a taxpayer's criminal violation of the said Code or
any of its implementing Regulations through payment of a
suggested compromise penalty.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
SECTION 2. General Principles.
2.1 The surcharge and/or interest herein prescribed shall
apply to all taxes, fees and charges imposed under the Code which
shall be collected at the same time, in the same manner, and as
part of the tax. cdasia
2.2 In case the tax due from the taxpayer is paid on a partial
or installment basis, the interest on the deficiency tax or on the
delinquency tax liability of the taxpayer shall be imposed from due
date of the tax until full payment thereof. The interest shall be
computed based on the diminishing balance of the tax, inclusive of
interests.
SECTION 3. Due Process Requirement in the Issuance of a
Deficiency Tax Assessment.
3.1 Mode of procedures in the issuance of a deficiency tax
assessment:
3.1.1 Notice for informal conference. The Revenue Officer
who audited the taxpayer's records shall, among others, state in
his report whether or not the taxpayer agrees with his findings
that the taxpayer is liable for deficiency tax or taxes. If the
taxpayer is not amenable, based on the said Officer's submitted
report of investigation, the taxpayer shall be informed, in writing,
by the Revenue District Office or by the Special Investigation
Division, as the case may be (in the case Revenue Regional
Offices) or by the Chief of Division concerned (in the case of the
BIR National Office) of the discrepancy or discrepancies in the
taxpayer's payment of his internal revenue taxes, for the purpose
of "Informal Conference," in order to afford the taxpayer with an
opportunity to present his side of the case. If the taxpayer fails to
respond within fifteen (15) days from date of receipt of the notice
for informal conference, he shall be considered in default, in which
case, the Revenue District Officer or the Chief of the Special
Investigation Division of the Revenue Regional Office, or the Chief
of Division in the National Office, as the case may be, shall
endorse the case with the least possible delay to the Assessment
Division of the Revenue Regional Office or to the Commissioner or
his duly authorized representative, as the case may be, for
appropriate review and issuance of a deficiency tax assessment, if
warranted.
3.1.2 Preliminary Assessment Notice (PAN). If after review
and evaluation by the Assessment Division or by the Commissioner
or his duly authorized representative, as the case may be, it is
determined that there exists sufficient basis to assess the taxpayer
for any deficiency tax or taxes, the said Office shall issue to the
taxpayer, at least by registered mail, a Preliminary Assessment
Notice (PAN) for the proposed assessment, showing in detail, the
facts and the law, rules and regulations, or jurisprudence on which
the proposed assessment is based (see illustration in ANNEX A
hereof). If the taxpayer fails to respond within fifteen (15) days
from date of receipt of the PAN, he shall be considered in default,
in which case, a formal letter of demand and assessment notice
shall be caused to be issued by the said Office, calling for payment
of the taxpayer's deficiency tax liability, inclusive of the applicable
penalties. LibLex
3.1.3 Exceptions to Prior Notice of the Assessment. The
notice for informal conference and the preliminary assessment
notice shall not be required in any of the following cases, in which
case, issuance of the formal assessment notice for the payment of
the taxpayer's deficiency tax liability shall be sufficient:
(i) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax appearing on the
face of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the
tax withheld and the amount actually remitted by the withholding
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
agent; or
(iii) When a taxpayer who opted to claim a refund or tax
credit of excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not
been paid; or
(v) When an article locally purchased or imported by an
exempt person, such as, but not limited to, vehicles, capital
equipment, machineries and spare parts, has been sold, traded or
transferred to non-exempt persons.
3.1.4 Formal Letter of Demand and Assessment Notice. The
formal letter of demand and assessment notice shall be issued by
the Commissioner or his duly authorized representative. The letter
of demand calling for payment of the taxpayer's deficiency tax or
taxes shall state the facts, the law, rules and regulations, or
jurisprudence on which the assessment is based, otherwise, the
formal letter of demand and assessment notice shall be void (see
illustration in ANNEX B hereof). The same shall be sent to the
taxpayer only by registered mail or by personal delivery. If sent by
personal delivery, the taxpayer or his duly authorized
representative shall acknowledge receipt thereof in the duplicate
copy of the letter of demand, showing the following: (a) His name;
(b) signature; (c) designation and authority to act for and in behalf
of the taxpayer, if acknowledged received by a person other than
the taxpayer himself; and (d) date of receipt thereof.
3.1.5 Disputed Assessment. The taxpayer or his duly
authorized representative may protest administratively against the
aforesaid formal letter of demand and assessment notice within
thirty (30) days from date of receipt thereof. If there are several
issues involved in the formal letter of demand and assessment
notice but the taxpayer only disputes or protests against the
validity of some of the issues raised, the taxpayer shall be required
to pay the deficiency tax or taxes attributable to the undisputed
issues, in which case, a collection letter shall be issued to the
taxpayer calling for payment of the said deficiency tax, inclusive of
the applicable surcharge and/or interest. No action shall be taken
on the taxpayer's disputed issues until the taxpayer has paid the
deficiency tax or taxes attributable to the said undisputed issues.
The prescriptive period for assessment or collection of the tax or
taxes attributable to the disputed issues shall be suspended. Llcd
The taxpayer shall state the facts, the applicable law, rules and
regulations, or jurisprudence on which his protest is based,
otherwise, his protest shall be considered void and without force
and effect. If there are several issues involved in the disputed
assessment and the taxpayer fails to state the facts, the applicable
law, rules and regulations, or jurisprudence in support of his
protest against some of the several issues on which the
assessment is based, the same shall be considered undisputed
issue or issues, in which case, the taxpayer shall be required to
pay the corresponding deficiency tax or taxes attributable thereto.
The taxpayer shall submit the required documents in support of
his protest within sixty (60) days from date of filing of his letter of
protest, otherwise, the assessment shall become final, executory
and demandable. The phrase "submit the required documents"
includes submission or presentation of the pertinent documents for
scrutiny and evaluation by the Revenue Officer conducting the
audit. The said Revenue Officer shall state this fact in his report of
investigation.
If the taxpayer fails to file a valid protest against the formal letter
of demand and assessment notice within thirty (30) days from
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
date of receipt thereof, the assessment shall become final,
executory and demandable.
If the protest is denied, in whole or in part, by the Commissioner,
the taxpayer may appeal to the Court of Tax Appeals within thirty
(30) days from date of receipt of the said decision, otherwise, the
assessment shall become final, executory and demandable.
In general, if the protest is denied, in whole or in part, by the
Commissioner or his duly authorized representative, the taxpayer
may appeal to the Court of Tax Appeals within thirty (30) days
from date of receipt of the said decision, otherwise, the
assessment shall become final, executory and demandable:
Provided, however, that if the taxpayer elevates his protest to the
Commissioner within thirty (30) days from date of receipt of the
final decision of the Commissioner's duly authorized
representative, the latter's decision shall not be considered final,
executory and demandable, in which case, the protest shall be
decided by the Commissioner. Cdtai
If the Commissioner or his duly authorized representative fails to
act on the taxpayer's protest within one hundred eighty (180) days
from date of submission, by the taxpayer, of the required
documents in support of his protest, the taxpayer may appeal to
the Court of Tax Appeals within thirty (30) days from the lapse of
the said 180-day period, otherwise, the assessment shall become
final, executory and demandable.
3.1.6 Administrative Decision on a Disputed Assessment.
The decision of the Commissioner or his duly authorized
representative shall (a) state the facts, the applicable law, rules
and regulations, or jurisprudence on which such decision is based,
otherwise, the decision shall be void (see illustration in ANNEX C
hereof), in which case, the same shall not be considered a decision
on a disputed assessment; and (b) that the same is his final
decision.
3.1.7 Constructive Service. If the notice to the taxpayer
herein required is served by registered mail, and no response is
received from the taxpayer within the prescribed period from date
of the posting thereof in the mail, the same shall be considered
actually or constructively received by the taxpayer. If the same is
personally served on the taxpayer or his duly authorized
representative who, however, refused to acknowledge receipt
thereof, the same shall be constructively served on the taxpayer.
Constructive service thereof shall be considered effected by
leaving the same in the premises of the taxpayer and this fact of
constructive service is attested to, witnessed and signed by at
least two (2) revenue officers other than the revenue officer who
constructively served the same. The revenue officer who
constructively served the same shall make a written report of this
matter which shall form part of the docket of this case (see
illustration in ANNEX D hereof).
SECTION 4. Civil Penalties.
4.1 Twenty-Five Percent (25%) Surcharge. There shall be
imposed, in addition to the basic tax required to be paid, a penalty
equivalent to twenty-five percent (25%) thereof, in any the
following cases:
4.1.1 Failure to file any return and pay the tax due thereon as
required under the provisions of this Code or rules and regulations
on the date prescribed; or
4.1.2 Unless otherwise authorized by the Commissioner, filing
a return with an internal revenue officer other than those with
whom the return is required to be filed; or
4.1.3 Failure to pay the deficiency tax within the time
prescribed for its payment in the notice of assessment; or
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
4.1.4 Failure to pay the full or part of the amount of tax shown
on any return required to be filed under the provisions of this Code
or rules and regulations, or the full amount of tax due for which no
return is required to be filed, on or before the date prescribed for
its payment. cdasia
4.2 Fifty Percent (50%) Surcharge:
4.2.1 In case of willful neglect to file the return within the
period prescribed by the Code, or in case a false or fraudulent
return is willfully made, the penalty to be imposed shall be fifty
percent (50%) of the tax or of the deficiency tax, in case any
payment has been made on the basis of such return before the
discovery of the falsity or fraud: Provided, That a substantial
underdeclaration of taxable sales, receipts or income, or a
substantial overstatement of deductions, as determined by the
Commissioner or his duly authorized representative, shall
constitute prima facie evidence of a false or fraudulent return:
Provided, further, That failure to report sales, receipts or income in
an amount exceeding thirty percent (30%) of that declared per
return, and a claim of deductions in an amount exceeding thirty
percent (30%) of actual deductions, shall render the taxpayer
liable for substantial underdeclaration of sales, receipts or income
or for overstatement of deductions, as mentioned herein:
Provided, further, that the term "willful neglect to file the return
within the period prescribed by the Code" shall not apply in case
the taxpayer, without notice from the Commissioner or his
authorized representative, voluntarily files the said return, in which
case, only 25% surcharge shall be imposed for late filing and late
payment of the tax in lieu of the above 50% surcharge.
Conversely, the 50% surcharge shall be imposed in case the
taxpayer files the return only after prior notice in writing from the
Commissioner or his duly authorized representative.
4.2.2 Section 6 (A) of the Code provides that any tax return
filed by a taxpayer "may be modified, changed or amended" by
the taxpayer "within three (3) years from date of such filing"
provided, however, that "no notice for audit or investigation of
such return, statement or declaration has, in the meantime, been
actually served upon the taxpayer." Thus, if upon investigation, it
is determined that the taxpayer's originally filed tax return is false
or fraudulent, such taxpayer shall remain liable to the 50% civil
penalty regardless that the taxpayer has filed his amended tax
return, if the said amended tax return, however, has been filed
only after issuance of the Letter of Authority for the investigation
of the taxpayer's tax return or such amendment has been made in
the course of the said investigation. cda
SECTION 5. Mode of Procedures in Computing for the Tax
and/or Applicable Surcharge. Shown hereunder are illustrative
cases for the computation and assessment of the tax, inclusive of
surcharge (if applicable) and interest:
<please see full text of RR for illustrations>
SECTION 6. Suggested Compromise Penalty in Extra-judicial
Settlement of a Taxpayer's Criminal Violation. Section 204 of
the Tax Code of 1997 provides that "All criminal violations may be
compromised except: (a) those already filed in court, or (b) those
involving fraud." This means that, in general, the taxpayer's
criminal liability arising from his violation of the pertinent provision
of the Code may be settled extra-judicially instead of the BIR
instituting against the taxpayer a criminal action in Court. A
compromise in extra-judicial settlement of the taxpayer's criminal
liability for his violation is consensual in character, hence, may not
be imposed on the taxpayer without his consent. Hence, the BIR
may only suggest settlement of the taxpayer's liability through a
Page 5
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
compromise. prLL
The extra-judicial settlement of the taxpayer's criminal liability and
the amount of the suggested compromise penalty shall conform
with the schedule of compromise penalties provided under
Revenue Memorandum Order No. 1-90 or as hereafter revised.
SECTION 7. Repealing Clause. Any revenue issuance
which is inconsistent herewith shall be considered repealed,
amended, or modified accordingly.
SECTION 8. Effectivity.
8.1 General Rule. In general, the provisions of these
Regulations shall be effective beginning January 1, 1998 pursuant
to the provisions of Section 8 of R.A. No. 8424, otherwise known
as the National Internal Revenue Code of 1997.
8.2 Computation of Surcharge and Interest on Deficiency Tax
Assessment. Any deficiency tax assessment issued beginning
January 1, 1998 shall be governed by the rules prescribed in these
Regulations. cda
8.3 Other Provisions. Any provision of these Regulations
not otherwise specifically provided in the National Internal
Revenue Code of 1997 shall take effect fifteen (15) days after
publication in any newspaper of general circulation.
Dean: So, during the prescriptive period to make an assessment,
the notices that are sent to the taxpayer are 3 kinds:
1. Notice of Informal Conference
2. PAN Preliminary Assessment Notice
3. FAN Final Assessment Notice
What is crucial here is the receipt of the FAN. You may ignore the
NIC, you should not ignore the FINAL assessment notice.
Otherwise, if you will ignore the FAN, then the assessment will
become final and executory. So when you receive the FAN, the
remedy of the taxpayer is to protest the assessment.
So you have an administrative protest and a judicial protest. So
the protest is brought before the commissioner, the commissioner
will decide then if there is a denial of the protest, it is brought to
the CTA, this time, judicial. If you will pursue your remedies, you
can appeal it from the division to CTA En Banc. This is under RA
9282. Then finally to the SC.
However, you have now the Bureau(?). This has been the process
until November 2013. The new procedure now is provided under
RR 18-2013.
SECTION 2. Amendment. Section 3 of RR 12-99 is hereby
amended by deleting Section 3.1.1 thereof which provides for the
preparation of a Notice of Informal Conference, thereby
renumbering other provisions thereof, and prescribing other
provisions for the assessment of tax liabilities. Section 3 of RR 12-
99 shall now read as follows:
SECTION 3. Due Process Requirement in the Issuance
of a Deficiency Tax Assessment.
3.1 Mode of procedure in the issuance of a deficiency tax
assessment:
3.1.1 Preliminary Assessment Notice (PAN). If
after review and evaluation by the Commissioner or his duly
authorized representative, as the case may be, it is determined
that there exists sufficient basis to assess the taxpayer for any
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
deficiency tax or taxes, the said Office shall issue to the taxpayer a
Preliminary Assessment Notice (PAN) for the proposed
assessment. It shall show in detail the facts and the law, rules and
regulations, or jurisprudence on which the proposed assessment is
based (see illustration in ANNEX A hereof).
If the taxpayer fails to respond within fifteen (15) days
from date of receipt of the PAN, he shall be considered in default,
in which case, a Formal Letter of Demand and Final Assessment
Notice (FLD/FAN) shall be issued calling for payment of the
taxpayer's deficiency tax liability, inclusive of the applicable
penalties.
If the taxpayer, within fifteen (15) days from date of
receipt of the PAN, responds that he/it disagrees with the findings
of deficiency tax or taxes, an FLD/FAN shall be issued within
fifteen (15) days from filing/submission of the taxpayers response,
calling for payment of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties.
3.1.2 Exceptions to Prior Notice of the
Assessment. Pursuant to Section 228 of the Tax Code, as
amended, a PAN shall not be required in any of the following
cases:
(i) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax appearing on the
face of the tax return filed by the taxpayer; or
(ii) When a discrepancy has been determined between the tax
withheld and the amount actually remitted by the withholding
agent; or
(iii) When a taxpayer who opted to claim a refund or tax credit of
excess creditable withholding tax for a taxable period was
determined to have carried over and automatically applied the
same amount claimed against the estimated tax liabilities for the
taxable quarter or quarters of the succeeding taxable year; or
(iv) When the excise tax due on excisable articles has not been paid;
or
(v) When an article locally purchased or imported by an exempt
person, such as, but not limited to, vehicles, capital equipment,
machineries and spare parts, has been sold, traded or transferred
to non-exempt persons.
In the above-cited cases, a FLD/FAN shall be issued outright.
3.1.3 Formal Letter of Demand and Final
Assessment Notice (FLD/FAN). The Formal Letter of
Demand and Final Assessment Notice (FLD/FAN) shall be issued by
the Commissioner or his duly authorized representative. The
FLD/FAN calling for payment of the taxpayer's deficiency tax or
taxes shall state the facts, the law, rules and regulations, or
jurisprudence on which the assessment is based; otherwise, the
assessment shall be void
(see illustration in ANNEX B hereof).
3.1.4 Disputed Assessment. The taxpayer or its
authorized representative or tax agent may protest
administratively against the aforesaid FLD/FAN within thirty (30)
days from date of receipt thereof. The taxpayer protesting an
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
assessment may file a written request for reconsideration or
reinvestigation defined as follows:
(i) Request for reconsideration refers to a plea of re-evaluation
of an assessment on the basis of existing records without need of
additional evidence. It may involve both a question of fact or of
law or both.
(ii) Request for reinvestigation refers to a plea of re-evaluation
of an assessment on the basis of newly discovered or additional
evidence that a taxpayer intends to present in the reinvestigation.
It may also involve a question of fact or of law or both.
The taxpayer shall state in his protest (i) the nature of
protest whether reconsideration or reinvestigation, specifying
newly discovered or additional evidence he intends to present if it
is a request for reinvestigation, (ii) date of the assessment notice,
and (iii) the applicable law, rules and regulations, or jurisprudence
on which his protest is based, otherwise, his protest shall be
considered void and without force and effect.
If there are several issues involved in the FLD/FAN but
the taxpayer only disputes or protests against the validity of some
of the issues raised, the assessment attributable to the undisputed
issue or issues shall become final, executory and demandable; and
the taxpayer shall be required to pay the deficiency tax or taxes
attributable thereto, in which case, a collection letter shall be
issued to the taxpayer calling for payment of the said deficiency
tax or taxes, inclusive of the applicable surcharge and/or interest.
If there are several issues involved in the disputed
assessment and the taxpayer fails to state the facts, the applicable
law, rules and regulations, or jurisprudence in support of his
protest against some of the several issues on which the
assessment is based, the same shall be considered undisputed
issue or issues, in which case, the assessment attributable thereto
shall become final, executory and demandable; and the taxpayer
shall be required to pay the deficiency tax or taxes attributable
thereto and a collection letter shall be issued to the taxpayer
calling for payment of the said deficiency tax, inclusive of the
applicable surcharge and/or interest.
For requests for reinvestigation, the taxpayer shall
submit all relevant supporting documents in support of his protest
within sixty (60) days from date of filing of his letter of protest,
otherwise, the assessment shall become final. The term relevant
supporting documents refer to those documents necessary to
support the legal and factual bases in disputing a tax assessment
as determined by the taxpayer. The sixty (60)-day period for the
submission of all relevant supporting documents shall not apply to
requests for reconsideration.
Furthermore, the term the assessment shall become final shall
mean the taxpayer is barred from disputing the correctness of the
issued assessment by introduction of newly discovered or
additional evidence, and the FDDA shall consequently be denied.
If the taxpayer fails to file a valid protest against the
FLD/FAN within thirty (30) days from date of receipt thereof, the
assessment shall become final, executory and demandable. No
request for reconsideration or reinvestigation shall be granted on
tax assessments that have already become final, executory and
demandable.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
If the protest is denied, in whole or in part, by the
Commissioners duly authorized representative, the taxpayer may
either: (i) appeal to the Court of Tax Appeals (CTA) within thirty
(30) days from date of receipt of the said decision; or (ii) elevate
his protest through request for reconsideration to the
Commissioner within thirty (30) days from date of receipt of the
said decision. No request for reinvestigation shall be allowed in
administrative appeal and only issues raised in the decision of the
Commissioners duly authorized representative shall be entertained
by the Commissioner.
If the protest is not acted upon by the Commissioners
duly authorized representative within one hundred eighty (180)
days counted from the date of filing of the protest in case of a
request reconsideration; or from date of submission by the
taxpayer of the required documents within sixty (60) days from
the date of filing of the protest in case of a request for
reinvestigation, the taxpayer may either: (i) appeal to the CTA
within thirty (30) days after the expiration of the one hundred
eighty (180)-day period; or (ii) await the final decision of the
Commissioners duly authorized representative on the disputed
assessment.
If the protest or administrative appeal, as the case may
be, is denied, in whole or in part, by the Commissioner, the
taxpayer may appeal to the CTA within thirty (30) days from date
of receipt of the said decision. Otherwise, the assessment shall
become final, executory and demandable. A motion for
reconsideration of the Commissioners denial of the protest or
administrative appeal, as the case may be, shall not toll the thirty
(30)-day period to appeal to the CTA.
If the protest or administrative appeal is not acted upon
by the Commissioner within one hundred eighty (180) days
counted from the date of filing of the protest, the taxpayer may
either: (i) appeal to the CTA within thirty (30) days from after the
expiration of the one hundred eighty (180)-day period; or (ii)
await the final decision of the Commissioner on the disputed
assessment and appeal such final decision to the CTA within thirty
(30) days after the receipt of a copy of such decision.
It must be emphasized, however, that in case of inaction
on protested assessment within the 180-day period, the option of
the taxpayer to either: (1) file a petition for review with the CTA
within 30 days after the expiration of the 180-day period; or (2)
await the final decision of the Commissioner or his duly authorized
representative on the disputed assessment and appeal such final
decision to the CTA within 30 days after the receipt of a copy of
such decision, are mutually exclusive and the resort to one bars
the application of the other.
3.1.5 Final Decision on a Disputed Assessment
(FDDA). The decision of the Commissioner or his duly
authorized representative shall state the (i) facts, the applicable
law, rules and regulations, or jurisprudence on which such decision
is based, otherwise, the decision shall be void (see illustration in
ANNEX C hereof), and (ii) that the same is his final decision.
3.1.6 Modes of Service. The notice
(PAN/FLD/FAN/FDDA) to the taxpayer herein required may be
served by the Commissioner or his duly authorized representative
through the following modes:
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
(i) The notice shall be served through personal service by delivering
personally a copy thereof to the party at his registered or known
address or wherever he may be found. A known address shall
mean a place other than the registered address where business
activities of the party are conducted or his place of residence.
In case personal service is not practicable, the notice shall be
served by substituted service or by mail.
(ii) Substituted service can be resorted to when the party is not present
at the registered or known address under the following
circumstances:
The notice may be left at the partys registered address, with his
clerk or with a person having charge thereof.
If the known address is a place where business activities of the
party are conducted, the notice may be left with his clerk or with a
person having charge thereof.
If the known address is the place of residence, substituted service
can be made by leaving the copy with a person of legal age
residing therein.
If no person is found in the partys registered or known address,
the revenue officers concerned shall bring a barangay official and
two (2) disinterested witnesses to the address so that they may
personally observe and attest to such absence. The notice shall
then be given to said barangay official. Such facts shall be
contained in the bottom portion of the notice, as well as the
names, official position and signatures of the witnesses.
Should the party be found at his registered or known address or
any other place but refuse to receive the notice, the revenue
officers concerned shall bring a barangay official and two (2)
disinterested witnesses in the presence of the party so that they
may personally observe and attest to such act of refusal. The
notice shall then be given to said barangay official. Such facts shall
be contained in the bottom portion of the notice, as well as the
names, official position and signatures of the witnesses.
Disinterested witnesses refers to persons of legal age other than
employees of the Bureau of Internal Revenue.
(iii) Service by mail is done by sending a copy of the notice by
registered mail to the registered or known address of the party
with instruction to the Postmaster to return the mail to the sender
after ten (10) days, if undelivered. A copy of the notice may also
be sent through reputable professional courier service. If no
registry or reputable professional courier service is available in the
locality of the addressee, service may be done by ordinary mail.
The server shall accomplish the bottom portion of the notice. He
shall also make a written report under oath before a Notary Public
or any person authorized to administer oath under Section 14 of
the NIRC, as amended, setting forth the manner, place and date
of service, the name of the person/barangay official/professional
courier service company who received the same and such other
relevant information. The registry receipt issued by the post office
or the official receipt issued by the professional courier company
containing sufficiently identifiable details of the transaction shall
constitute sufficient proof of mailing and shall be attached to the
case docket.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Service to the tax agent/practitioner, who is appointed
by the taxpayer under circumstances prescribed in the pertinent
regulations on accreditation of tax agents, shall be deemed service
to the taxpayer.
SECTION 3. Amendment. Section 5 of RR 12-99 is hereby
amended by modifying Section 5.5 thereof which provides for
modes of procedures in computing for the tax and/or applicable
surcharge. In cases of late payment of a deficiency tax assessed,
the taxpayer shall be liable for the delinquency interest provided
under Section 249 (C)(3) of the 1997 National Internal Revenue
Code, as amended. Section 5.5 of RR 12-99 shall now read as
follows:
5.5 Late payment of a deficiency tax assessed. In
general, the deficiency tax assessed shall be paid by the taxpayer
within the time prescribed in the notice and demand, otherwise,
such taxpayer shall be liable for the delinquency interest incident
to late payment.
Now in RR 18-2013, it removed the informal conference. So there
are 2 notices now under RR 18-2013:
1. PAN
2. FAN
It got rid of the informal conference.
Now under sec. 228, the statute provides that a preliminary
assessment notice be sent to the taxpayer:
When the Commissioner or his duly authorized representative finds
that proper taxes should be assessed, he shall first notify the
taxpayer of his findings
Pag-inignore mo yung PAN, then tatanggap ka ng FAN. Now,
these notices are sent PAN, etc, all these are required because of
the due process requirement so that the taxpayer can challenge
the validity of the assessment, so he should be notified. So
beginning November 2013, the notices you will receive now, the
BIR will not give a notice of informal conference. What you will
receive is the PAN paginignore mo yan, then the FAN. Still the
same, the protest has to be filed with the commissioner.
You will have a more elaborate idea of the process if you read RR
18-2013 So you have the statutory provisions as well as the RR
to guide you on the procedural aspect.
But there are variations to these remedies, this is just a straight
line remedy. Now, yung variation jan, because there is a period to
decide under sec. 228.
COLLECTION
So from these assessment, when the assessment now becomes
final and executory, the next process is the COLLECTION. So you
also have remedies for the collection of the tax.
SEC. 205. Remedies for the Collection of Delinquent Taxes. - The
civil remedies for the collection of internal revenue taxes, fees or
charges, and any increment thereto resulting from delinquency
shall be:
(a) By distraint of goods, chattels, or effects, and other personal
property of whatever character, including stocks and other
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
securities, debts, credits, bank accounts and interest in and rights
to personal property, and by levy upon real property and interest
in rights to real property; and
So the remedies to collect, once the assessment has become final
and executory, then the collection proceedings follow. Now, the
remedies to collect are grouped:
1. Administrative Remedies
a. Distraint involves the execution against
person properties of the taxpayer (206- 208)
SEC. 206. Constructive Distraint of the Property of A Taxpayer. -
To safeguard the interest of the Government, the Commissioner
may place under constructive distraint the property of a delinquent
taxpayer or any taxpayer who, in his opinion, is retiring from any
business subject to tax, or is intending to leave the Philippines or
to remove his property therefrom or to hide or conceal his
property or to perform any act tending to obstruct the proceedings
for collecting the tax due or which may be due from him.
The constructive distraint of personal property shall be affected by
requiring the taxpayer or any person having possession or control
of such property to sign a receipt covering the property distrained
and obligate himself to preserve the same intact and unaltered
and not to dispose of the same ;in any manner whatever, without
the express authority of the Commissioner.
In case the taxpayer or the person having the possession and
control of the property sought to be placed under constructive
distraint refuses or fails to sign the receipt herein referred to, the
revenue officer effecting the constructive distraint shall proceed to
prepare a list of such property and, in the presence of two (2)
witnessed, leave a copy thereof in the premises where the
property distrained is located, after which the said property shall
be deemed to have been placed under constructive distraint.
SEC. 207. Summary Remedies. -
(A) Distraint of Personal Property. - Upon the failure of the person
owing any delinquent tax or delinquent revenue to pay the same
at the time required, the Commissioner or his duly authorized
representative, if the amount involved is in excess of One million
pesos (P1,000,000), or the Revenue District Officer, if the amount
involved is One million pesos (P1,000,000) or less, shall seize and
distraint any goods, chattels or effects, and the personal property,
including stocks and other securities, debts, credits, bank
accounts, and interests in and rights to personal property of such
persons ;in sufficient quantity to satisfy the tax, or charge,
together with any increment thereto incident to delinquency, and
the expenses of the distraint and the cost of the subsequent sale.
A report on the distraint shall, within ten (10) days from receipt of
the warrant, be submitted by the distraining officer to the Revenue
District Officer, and to the Revenue Regional Director: Provided,
That the Commissioner or his duly authorized representative shall,
subject to rules and regulations promulgated by the Secretary of
Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That a
consolidated report by the Revenue Regional Director may be
required by the Commissioner as often as necessary.
SEC. 208. Procedure for Distraint and Garnishment. - The officer
serving the warrant of distraint shall make or cause to be made an
account of the goods, chattels, effects or other personal property
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
distrained, a copy of which, signed by himself, shall be left either
with the owner or person from whose possession such goods,
chattels, or effects or other personal property were taken, or at
the dwelling or place of business of such person and with someone
of suitable age and discretion, to which list shall be added a
statement of the sum demanded and note of the time and place of
sale.
Stocks and other securities shall be distrained by serving a copy of
the warrant of distraint upon the taxpayer and upon the president,
manager, treasurer or other responsible officer of the corporation,
company or association, which issued the said stocks or securities.
Debts and credits shall be distrained by leaving with the person
owing the debts or having in his possession or under his control
such credits, or with his agent, a copy of the warrant of distraint.
The warrant of distraint shall be sufficient authority to the person
owning the debts or having in his possession or under his control
any credits belonging to the taxpayer to pay to the Commissioner
the amount of such debts or credits.
Bank accounts shall be garnished by serving a warrant of
garnishment upon the taxpayer and upon the president, manager,
treasurer or other responsible officer of the bank. Upon receipt of
the warrant of garnishment, the bank shall tun over to the
Commissioner so much of the bank accounts as may be sufficient
to satisfy the claim of the Government.
b. Levy - on the real property. (207, 213, 214,
202, 215)
Sec. 207 (B) Levy on Real Property. - After the expiration of the
time required to pay the delinquent tax or delinquent revenue as
prescribed in this Section, real property may be levied upon,
before simultaneously or after the distraint of personal property
belonging to the delinquent. To this end, any internal revenue
officer designated by the Commissioner or his duly authorized
representative shall prepare a duly authenticated certificate
showing the name of the taxpayer and the amounts of the tax and
penalty due from him. Said certificate shall operate with the force
of a legal execution throughout the Philippines.
Levy shall be affected by writing upon said certificate a description
of the property upon which levy is made. At the same time,
written notice of the levy shall be mailed to or served upon the
Register of Deeds for the province or city where the property is
located and upon the delinquent taxpayer, or if he be absent from
the Philippines, to his agent or the manager of the business in
respect to which the liability arose, or if there be none, to the
occupant of the property in question.
In case the warrant of levy on real property is not issued before or
simultaneously with the warrant of distraint on personal property,
and the personal property of the taxpayer is not sufficient to
satisfy his tax delinquency, the Commissioner or his duly
authorized representative shall, within thirty (30) days after
execution of the distraint, proceed with the levy on the taxpayer's
real property.
Within ten (10) days after receipt of the warrant, a report on any
levy shall be submitted by the levying officer to the Commissioner
or his duly authorized representative: Provided, however, That a
consolidated report by the Revenue Regional Director may be
required by the Commissioner as often as necessary: Provided,
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
further, That the Commissioner or his duly authorized
representative, subject to rules and regulations promulgated by
the Secretary of Finance, upon recommendation of the
Commissioner, shall have the authority to lift warrants of levy
issued in accordance with the provisions hereof.
SEC. 213. Advertisement and Sale. - Within twenty (20) days after
levy, the officer conducting the proceedings shall proceed to
advertise the property or a usable portion thereof as may be
necessary to satisfy the claim and cost of sale; and such
advertisement shall cover a period of a least thirty (30) days. It
shall be effectuated by posting a notice at the main entrance of
the municipal building or city hall and in public and conspicuous
place in the barrio or district in which the real estate lies and ;by
publication once a week for three (3) weeks in a newspaper of
general circulation in the municipality or city where the property is
located. The advertisement shall contain a statement of the
amount of taxes and penalties so due and the time and place of
sale, the name of the taxpayer against whom taxes are levied, and
a short description of the property to be sold. At any time before
the day fixed for the sale, the taxpayer may discontinue all
proceedings by paying the taxes, penalties and interest. If he does
not do so, the sale shall proceed and shall be held either at the
main entrance of the municipal building or city hall, or on the
premises to be sold, as the officer conducting the proceedings
shall determine and as the notice of sale shall specify.
Within five (5) days after the sale, a return by the distraining or
levying officer of the proceedings shall be entered upon the
records of the Revenue Collection Officer, the Revenue District
officer and the Revenue Regional Director. The Revenue Collection
Officer, in consultation with the Revenue district Officer, shall then
make out and deliver to the purchaser a certificate from his
records, showing the proceedings of the sale, describing the
property sold stating the name of the purchaser and setting out
the exact amount of all taxes, penalties and interest: Provided,
however, That in case the proceeds of the sale exceeds the claim
and cost of sale, the excess shall be turned over to the owner of
the property.
The Revenue Collection Officer, upon approval by the Revenue
District Officer may, out of his collection, advance an amount
sufficient to defray the costs of collection by means of the
summary remedies provided for in this Code, including ;the
preservation or transportation in case of personal property, and
the advertisement and subsequent sale, both in cases of personal
and real property including improvements found on the latter. In
his monthly collection reports, such advances shall be reflected
and supported by receipts.
SEC. 214. Redemption of Property Sold. - Within one (1) year from
the date of sale, the delinquent taxpayer, or any one for him, shall
have the right of paying to the Revenue District Officer the
amount of the public taxes, penalties, and interest thereon from
the date of delinquency to the date of sale, together with interest
on said purchase price at the rate of fifteen percent (15%) per
annum from the date of purchase to the date of redemption, and
such payment shall entitle the person paying to the delivery of the
certificate issued to the purchaser and a certificate from the said
Revenue District Officer that he has thus redeemed the property,
and the Revenue District Officer shall forthwith pay over to the
purchaser the amount by which such property has thus been
redeemed, and said property thereafter shall be free form the lien
of such taxes and penalties.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
The owner shall not, however, be deprived of the possession of
the said property and shall be entitled to the rents and other
income thereof until the expiration of the time allowed for its
redemption.
SEC. 202. Final Deed to Purchaser. - In case the taxpayer shall not
redeem the property as herein provided the Revenue District
Officer shall, as grantor, execute a deed conveying to the
purchaser so much of the property as has been sold, free from all
liens of any kind whatsoever, and the deed shall succintly recite all
the proceedings upon which the validity of the sale depends.
SEC. 215. Forfeiture to Government for Want of Bidder. - In case
there is no bidder for real property exposed for sale as herein
above provided or if the highest bid is for an amount insufficient to
pay the taxes, penalties and costs, the Internal Revenue Officer
conducting the sale shall declare the property forfeited to the
Government in satisfaction of the claim in question and within two
(2) days thereafter, shall make a return of his proceedings and the
forfeiture which shall be spread upon the records of his office. It
shall be the duty of the Register of Deeds concerned, upon
registration with his office of any such declaration of forfeiture, to
transfer the title of the property forfeited to the Government
without the necessity of an order from a competent court.
Within one (1) year from the date of such forfeiture, the taxpayer,
or any one for him may redeem said property by paying to the
Commissioner or the latter's Revenue Collection Officer the full
amount of the taxes and penalties, together with interest thereon
and the costs of sale, but if the property be not thus redeemed,
the forfeiture shall become absolute.
Now the question here is when the government will pursue
distraint, is it prevented or precluded to pursue levy? In other
words, pag may nabira na siyang personal property, is the
government prevented from pursuing agains the real property?
Thats not correct
Sec. 205. Either of these remedies or both simultaneously
may be pursued in the discretion of the authorities
charged with the collection of such taxes: Provided,
however, That the remedies of distraint and levy shall not be
availed of where the amount of tax involve is not more than One
hundred pesos (P100).
The judgment in the criminal case shall not only impose the
penalty but shall also order payment of the taxes subject of the
criminal case as finally decided by the Commissioner.
The Bureau of Internal Revenue shall advance the amounts
needed to defray costs of collection by means of civil or criminal
action, including the preservation or transportation of personal
property distrained and the advertisement and sale thereof, as
well as of real property and improvements thereon
c. Then you have the remedy of forfeiture. (224-
225)
SEC. 224. Remedy for Enforcement of Forfeitures. - The forfeiture
of chattels and removable fixtures of any sort shall be enforced by
the seizure and sale, or destruction, of the specific forfeited
property. The forfeiture of real property shall be enforced by a
judgment of condemnation and sale in a legal action or
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
proceeding, civil or criminal, as the case may require.
SEC. 225. When Property to be Sold or Destroyed. - Sales of
forfeited chattels and removable fixtures shall be effected, so far
as practicable, in the same manner and under the same conditions
as the public notice and the time and manner of sale as are
prescribed for sales of personal property distrained for the non-
payment of taxes.
Distilled spirits, liquors, cigars, cigarettes, other manufactured
products of tobacco, and all apparatus used I or about the illicit
production of such articles may, upon forfeiture, be destroyed by
order of the Commissioner, when the sale of the same for
consumption or use would be injurious to public health or
prejudicial to the enforcement of the law.
All other articles subject to excise tax, which have been
manufactured or removed in violation of this Code, as well as dies
for the printing or making of internal revenue stamps and labels
which are in imitation of or purport to be lawful stamps, or labels
may, upon forfeiture, be sold or destroyed in the discretion of the
Commissioner.
Forfeited property shall not be destroyed until at least twenty (20)
days after seizure.
d. Enforcement of the tax lien
SEC. 219. Nature and Extent of Tax Lien. - If any person,
corporation, partnership, joint-account (cuentas en participacion),
association or insurance company liable to pay an internal revenue
tax, neglects or refuses to pay the same after demand, the
amount shall be a lien in favor of the Government of the
Philippines from the time when the assessment was made by the
Commissioner until paid, with interests, penalties, and costs that
may accrue in addition thereto upon all property and rights to
property belonging to the taxpayer: Provided, That this lien shall
not be valid against any mortgagee purchaser or judgment
creditor until notice of such lien shall be filed by the Commissioner
in the office of the Register of Deeds of the province or city where
the property of the taxpayer is situated or located.
e. And other remedies we will take this later on
So these are just some of the administrative remedies under the
NIRC.
2. Judicial Remedies
Sec. 205
(b) By civil or criminal action.
SEC. 220. Form and Mode of Proceeding in Actions Arising under
this Code. - Civil and criminal actions and proceedings instituted in
behalf of the Government under the authority of this Code or other
law enforced by the Bureau of Internal Revenue shall be brought
in the name of the Government of the Philippines and shall be
conducted by legal officers of the Bureau of Internal Revenue but
no civil or criminal action for the recovery of taxes or the
enforcement of any fine, penalty or forfeiture under this Code shall
be filed in court without the approval of the Commissioner.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
1. Civil Action this is a case for sum of money to collect
the tax thru the courts
2. Criminal Action
When you pursue an action under 281:
SEC. 281. Prescription for Violations of any Provision of this Code.
- All violations of any provision of this Code shall prescribe after
Five (5) years.
Prescription shall begin to run from the day of the commission of
the violation of the law, and if the same be not known at the time,
from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty persons and shall begin to run again if
the proceedings are dismissed for reasons not constituting
jeopardy.
The term of prescription shall not run when the offender is absent
from the Philippines.
When you file a criminal action to collect the tax, that is a
collection remedy.
Now, what is important before you pursue collection remedies,
there must be notice because you cannot collect the deficiency if
you havent notified the taxpayer of the deficiency finding, due
process.
EXCEPT WHEN YOU FILE A CRIMINAL ACTION. When you file a
criminal action, that is also a collection proceeding, which under
281 will not require any prior assessment. So when we file directly
a criminal case, we still follow the proceedings under criminal
procedure:
1. File a complaint (BIR thru DOJ or Fiscals office)
2. Prosecutors office will determine probable cause
3. If there is probable cause, an information is filed. The
information filed will provide also for the amount that is
to be collected apart from the violation.
4. Then, it is brought to court, the taxpayer is allowed to
post bail.
5. Then it goes through the process pre-trial, ADR,
whatever, even at that point they can settle. Even when
there is on-going collection proceedings, they can enter
into a compromise.
Sec. 204. All criminal violations may be compromised except: (a)
those already filed in court, or (b) those involving fraud.
So except when there is fraud, criminal actions cannot be
compromised. Any instance, the juridical proceedings as a criminal
action, the government and the taxpayer may enter into a
compromise.
6. Prosecution presents evidence, etc
7. The court will rule or make a decision
So you have these remedies on the part of the government within
which to collect the tax.
So well just continue with the OTHER ADMINISTRATIVE
REMEDIES
Page 11
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
e. COMPROMISE
SEC. 204. Authority of the Commissioner to Compromise, Abate
and Refund or Credit Taxes. - The Commissioner may -
(A) Compromise the payment of any internal revenue tax, when:
(1) A reasonable doubt as to the validity of the claim against the
taxpayer exists; or
(2) The financial position of the taxpayer demonstrates a clear
inability to pay the assessed tax.
The compromise settlement of any tax liability shall be subject to
the following minimum amounts:
For cases of financial incapacity, a minimum compromise rate
equivalent to ten percent (10%) of the basic assessed tax; and
For other cases, a minimum compromise rate equivalent to forty
percent (40%) of the basic assessed tax.
Where the basic tax involved exceeds One million pesos
(P1,000.000) or where the settlement offered is less than the
prescribed minimum rates, the compromise shall be subject to the
approval of the Evaluation Board which shall be composed of the
Commissioner and the four (4) Deputy Commissioners.
f. Informers reward - the government may
pursue collection thru the informers reward
this is 215 [pero 282 lang nako ni nakita. ]
SEC. 282. Informer's Reward to Persons Instrumental in the
Discovery of Violations of the National Internal Revenue Code and
in the Discovery and Seizure of Smuggled Goods. -
(A) For Violations of the National Internal Revenue Code. Any
person, except an internal revenue official or employee, or other
public official or employee, or his relative within the sixth degree
of consanguinity, who voluntarily gives definite and sworn
information, not yet in the possession of the Bureau of Internal
Revenue, leading to the discovery of frauds upon the internal
revenue laws or violations of any of the provisions thereof, thereby
resulting in the recovery of revenues, surcharges and fees and/or
the conviction of the guilty party and/or the imposition of any of
the fine or penalty, shall be rewarded in a sum equivalent to ten
percent (10%) of the revenues, surcharges or fees recovered
and/or fine or penalty imposed and collected or One Million Pesos
(P1,000,000) per case, whichever is lower. The same amount of
reward shall also be given to an informer where the offender has
offered to compromise the violation of law committed by him and
his offer has been accepted by the Commissioner and collected
from the offender: Provided, That should no revenue, surcharges
or fees be actually recovered or collected, such person shall not be
entitled to a reward: Provided, further, That the information
mentioned herein shall not refer to a case already pending or
previously investigated or examined by the Commissioner or any
of his deputies, agents or examiners, or the Secretary of Finance
or any of his deputies or agents: Provided, finally, That the reward
provided herein shall be paid under rules and regulations issued by
the Secretary of Finance, upon recommendation of the
Commissioner.
(B) For Discovery and Seizure of Smuggled Goods.To encourage
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
the public to extend full cooperation in eradicating smuggling, a
cash reward equivalent to ten percent (10%) of the fair market
value of the smuggled and confiscated goods or One Million Pesos
(P1,000,000) per case, whichever is lower, shall be given to
persons instrumental in the discovery and seizure of such
smuggled goods.
The cash rewards of informers shall be subject to income tax,
collected as a final withholding tax, at a rate of ten percent (10%).
The Provisions of the foregoing Subsections notwithstanding, all
public officials, whether incumbent or retired, who acquired the
information in the course of the performance of their duties during
their incumbency, are prohibited from claiming informer's reward.
Informers reward will be given to informers who provide
information to the BIR that there is a potential tax evader. That
information should not be known to the BIR, because it could be
that that taxpayer is under investigation or surveillance already.
[Naghatag si dean ug elements]
1. That information is not yet with the BIR, and
2. provided under oath by the informer,
3. then in pursuit of that information the BIR was able to
collect,
Then the informer will be given a reward.
For purposes of smuggling, because when you bring in smuggled
goods, there are 2 taxes that are collected:
1. Customs duties
2. Internal Revenue Taxes
Remember that for VAT purposes, when you bring in imported
articles, you are liable for the customs duties as well as vat; it is
excisable articles, then you pay the duties as well as the excise
tax.
So for the informers reward for smuggling activities, it will cover
all sectors, whether government EE or private person who
provided information, they will be entitled to the reward. BUT for
violation of the NIRC, the government EE is not entitled to the
reward, only private person.
g. Arrest, Search, Seizure Secs 5, 9, 6 [please
verify, wala koy makita connection sa 9. ]
SEC. 5. Power of the Commissioner to Obtain Information, and to
Summon, Examine, and Take Testimony of Persons. - In
ascertaining the correctness of any return, or in making a return
when none has been made, or in determining the liability of any
person for any internal revenue tax, or in collecting any such
liability, or in evaluating tax compliance, the Commissioner is
authorized:
(A) To examine any book, paper, record, or other data which may
be relevant or material to such inquiry;
(B) To Obtain on a regular basis from any person other than the
person whose internal revenue tax liability is subject to audit or
investigation, or from any office or officer of the national and local
governments, government agencies and instrumentalities,
including the Bangko Sentral ng Pilipinas and government-owned
or -controlled corporations, any information such as, but not
Page 12
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
limited to, costs and volume of production, receipts or sales and
gross incomes of taxpayers, and the names, addresses, and
financial statements of corporations, mutual fund companies,
insurance companies, regional operating headquarters of
multinational companies, joint accounts, associations, joint
ventures of consortia and registered partnerships, and their
members;
(C) To summon the person liable for tax or required to file a
return, or any officer or employee of such person, or any person
having possession, custody, or care of the books of accounts and
other accounting records containing entries relating to the
business of the person liable for tax, or any other person, to
appear before the Commissioner or his duly authorized
representative at a time and place specified in the summons and
to produce such books, papers, records, or other data, and to give
testimony;
(D) To take such testimony of the person concerned, under oath,
as may be relevant or material to such inquiry; and
(E) To cause revenue officers and employees to make a canvass
from time to time of any revenue district or region and inquire
after and concerning all persons therein who may be liable to pay
any internal revenue tax, and all persons owning or having the
care, management or possession of any object with respect to
which a tax is imposed.
The provisions of the foregoing paragraphs notwithstanding,
nothing in this Section shall be construed as granting the
Commissioner the authority to inquire into bank deposits other
than as provided for in Section 6(F) of this Code.
SEC. 9. - Internal Revenue Districts. - With the approval of the
Secretary of Finance, the Commissioner shall divide the Philippines
into such number of revenue districts as may form time to time be
required for administrative purposes. Each of these districts shall
be under the supervision of a Revenue District Officer.
SEC. 6. Power of the Commissioner to Make assessments and
Prescribe additional Requirements for Tax Administration and
Enforcement. -
(A) Examination of Returns and Determination of Tax Due. - After
a return has been filed as required under the provisions of this
Code, the Commissioner or his duly authorized representative may
authorize the examination of any taxpayer and the assessment of
the correct amount of tax: Provided, however; That failure to file a
return shall not prevent the Commissioner from authorizing the
examination of any taxpayer.The tax or any deficiency tax so
assessed shall be paid upon notice and demand from the
Commissioner or from his duly authorized representative.
Any return, statement of declaration filed in any office authorized
to receive the same shall not be withdrawn: Provided, That within
three (3) years from the date of such filing , the same may be
modified, changed, or amended: Provided, further, That no notice
for audit or investigation of such return, statement or declaration
has in the meantime been actually served upon the taxpayer.
(B) Failure to Submit Required Returns, Statements, Reports and
other Documents. - When a report required by law as a basis for
the assessment of any national internal revenue tax shall not be
forthcoming within the time fixed by laws or rules and regulations
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
or when there is reason to believe that any such report is false,
incomplete or erroneous, the Commissioner shall assess the proper
tax on the best evidence obtainable.
In case a person fails to file a required return or other document
at the time prescribed by law, or willfully or otherwise files a false
or fraudulent return or other document, the Commissioner shall
make or amend the return from his own knowledge and from such
information as he can obtain through testimony or otherwise,
which shall be prima facie correct and sufficient for all legal
purposes.
(C) Authority to Conduct Inventory-taking, surveillance and to
Prescribe Presumptive Gross Sales and Receipts. - The
Commissioner may, at any time during the taxable year, order
inventory-taking of goods of any taxpayer as a basis for
determining his internal revenue tax liabilities, or may place the
business operations of any person, natural or juridical, under
observation or surveillance if there is reason to believe that such
person is not declaring his correct income, sales or receipts for
internal revenue tax purposes. The findings may be used as the
basis for assessing the taxes for the other months or quarters of
the same or different taxable years and such assessment shall be
deemed prima facie correct.
When it is found that a person has failed to issue receipts and
invoices in violation of the requirements of Sections 113 and 237
of this Code, or when there is reason to believe that the books of
accounts or other records do not correctly reflect the declarations
made or to be made in a return required to be filed under the
provisions of this Code, the Commissioner, after taking into
account the sales, receipts, income or other taxable base of other
persons engaged in similar businesses under similar situations or
circumstances or after considering other relevant information may
prescribe a minimum amount of such gross receipts, sales and
taxable base, and such amount so prescribed shall be prima facie
correct for purposes of determining the internal revenue tax
liabilities of such person.
(D) Authority to Terminate Taxable Period. _ When it shall come to
the knowledge of the Commissioner that a taxpayer is retiring
from business subject to tax, or is intending to leave the
Philippines or to remove his property therefrom or to hide or
conceal his property, or is performing any act tending to obstruct
the proceedings for the collection of the tax for the past or current
quarter or year or to render the same totally or partly ineffective
unless such proceedings are begun immediately, the
Commissioner shall declare the tax period of such taxpayer
terminated at any time and shall send the taxpayer a notice of
such decision, together with a request for the immediate payment
of the tax for the period so declared terminated and the tax for
the preceding year or quarter, or such portion thereof as may be
unpaid, and said taxes shall be due and payable immediately and
shall be subject to all the penalties hereafter prescribed, unless
paid within the time fixed in the demand made by the
Commissioner.
(E) Authority of the Commissioner to Prescribe Real Property
Values. - The Commissioner is hereby authorized to divide the
Philippines into different zones or areas and shall, upon
consultation with competent appraisers both from the private and
public sectors, determine the fair market value of real properties
located in each zone or area. For purposes of computing any
internal revenue tax, the value of the property shall be, whichever
Page 13
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
is the higher of;
(1) the fair market value as determined by the Commissioner, or
(2) the fair market value as shown in the schedule of values of the
Provincial and City Assessors.
(F) Authority of the Commissioner to inquire into Bank Deposit
Accounts. - Notwithstanding any contrary provision of Republic Act
No. 1405 and other general or special laws, the Commissioner is
hereby authorized to inquire into the bank deposits of:
(1) a decedent to determine his gross estate; and
(2) any taxpayer who has filed an application for compromise of
his tax liability under Sec. 204 (A) (2) of this Code by reason of
financial incapacity to pay his tax liability.
In case a taxpayer files an application to compromise the payment
of his tax liabilities on his claim that his financial position
demonstrates a clear inability to pay the tax assessed, his
application shall not be considered unless and until he waives in
writing his privilege under Republic act NO. 1405 or under other
general or special laws, and such waiver shall constitute the
authority of the Commissioner to inquire into the bank deposits of
the taxpayer.
(G) Authority to Accredit and Register Tax Agents. - The
Commissioner shall accredit and register, based on their
professional competence, integrity and moral fitness, individuals
and general professional partnerships and their representatives
who prepare and file tax returns, statements, reports, protests,
and other papers with or who appear before, the Bureau for
taxpayers. Within one hundred twenty (120) days from January 1,
1998, the Commissioner shall create national and regional
accreditation boards, the members of which shall serve for three
(3) years, and shall designate from among the senior officials of
the Bureau, one (1) chairman and two (2) members for each
board, subject to such rules and regulations as the Secretary of
Finance shall promulgate upon the recommendation of the
Commissioner.
Individuals and general professional partnerships and their
representatives who are denied accreditation by the Commissioner
and/or the national and regional accreditation boards may appeal
such denial to the Secretary of Finance, who shall rule on the
appeal within sixty (60) days from receipt of such appeal. Failure
of the Secretary of Finance to rule on the Appeal within the
prescribed period shall be deemed as approval of the application
for accreditation of the appellant.
(H) Authority of the Commissioner to Prescribe Additional
Procedural or Documentary Requirements. - The Commissioner
may prescribe the manner of compliance with any documentary or
procedural requirement in connection with the submission or
preparation of financial statements accompanying the tax returns.
Now in the book of de leon, you have there an enumeration, or a
list of these remedies [please check nalang ] but these remedies
are not the only remedies, there are also other remedies that the
government may resort to to collect the tax.
So we have that overview:
1. from the filing of returns
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
2. the returns will be subject to assessment
3. once the assessment becomes final, collection will be
pursued by the government
So when you go into the phases or aspects of the power of
taxation:
1. you have the levy stage which is the imposition of the
tax through the legislative. now levying is legislative, it
determines the tax policy of the government
2. Then you have the assessment This pertains to tax
3. then the collection administration
Now the branch of government which makes the assessment, you
have the BIR, in the case of customs, the BOC. You also have the
department of finance, charged with or making interpretations of
the tax laws. But for the purposes of the NIRC, it is the BIR. So
you have these administrative agencies in the tax administration:
1. BIR
2. BOC
3. DOF
For the judicial branch involved in tax administration, you have:
1. CTA under RA9282, now has an exclusive appellate
jurisdiction and an exclusive original jurisdiction.
Exclusive Original:
a. Assessments which become final and executory
for taxes and fees in the NIRC amounting to 1M
or more, excluding charges, will be filed directly
with the CTA.
b. Criminal actions where the amount to be
collected is 1M or more are directly filed with
the CTA
Those amounts involving less than 1M will go to the RTC
or MTC, depending on the jurisdictional amounts.
Exclusive Appellate:
a. From the BIR Commissioner once the protest is
denied by Commissioner, it is brought to the
CTA [division], then En Banc, then SC.
2. SC
3. RTC, MTC you have these courts in the collection or
pursuing a criminal action
January 8, 2015
So we had already presented a presentation on the assessment
and collection of taxes. So the assessment is a process in the
event or after the filing of the returns. Remember, before we
discuss this further we have section 6 of the NIRC in connection
with the filing of the returns.
SEC. 6. Power of the Commissioner to Make assessments
and Prescribe additional Requirements for Tax
Administration and Enforcement. - (A)Examination of Returns
and Determination of Tax Due - After a return has been filed as
required under the provisions of this Code, the Commissioner or
his duly authorized representative may authorize the examination
of any taxpayer and the assessment of the correct amount of
tax: Provided, however; That failure to file a return shall not
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
prevent the Commissioner from authorizing the examination of any
taxpayer.
Any return, statement of declaration filed in any office authorized
to receive the same shall not be withdrawn: Provided, That within
three (3) years from the date of such filing, the same may be
modified, changed, or amended: Provided, further, That no notice
for audit or investigation of such return, statement or declaration
has in the meantime been actually served upon the taxpayer.
Now, it is not true, but it is ideal that after the return was filed by
the taxpayer, all the taxpayer must be assessed. Although this is
ideal but hindi lahat ng mga taxpayer kaya ma-assess, the
examination of the returns and the assessment of the tax. Ang
gina-gawa ng BIR is they benchmark the taxpayers, because of
running against small time taxpayers is the same cost at running
after large taxpayers. So they benchmarked taxpayers or
categorized them. Those filing this much, sila yung suki, and the
returns of these taxpayers will be subject to examination and
assessment. Kasi the government does not have the required
resources to run after all of the taxpayers to conduct the
investigation and assessment. So nagpipili lang yan. Pero, once
you are subjected to an investigation of the returns and an
assessment of the required tax, in reality, babalik-balikan ka na
nyan.
So that does not mean, that after the filing of the returns and pay
their taxes, that is the end or tapos na, because that is one of the
powers of the commissioner to make the investigation and
assessment to determine the correct amount of tax. To find out if
that the returns filed are correct and tama ba yung amount of tax
na binayaran. There is an examination and an assessment.
Now the failure to file a return shall not prevent the commissioner
from authorizing the examination of the taxpayer. So even if you
did not file your return that will not prevent the commissioner for
conducting the examination and assessment. So that is not a
reason na kung hindi ka nagfile ng return ng iyung business then
the commissioner now will authorized the examination to
investigate you.
The tax of any deficiency tax so assessed shall be paid upon notice
and demand by the commissioner or his duly authorized
representative. So you will be notified, there will be a notice, and
then a demand from the CIR or his duly authorized representative.
So in light of the due process requirement, the CIR or his duly
authorized representative will notify the taxpayer. SO the notice of
assessment, that is also the requirement of due process. It
contains not only the demand to pay the deficiency tax but also
the explanation of the facts and the law in which the assessment
was base.
Now any return, statement of declaration filed in any office
authorized to receive the same shall not be withdrawn, So
meaning, once nagfile ka nah ng iyong tax return you cannot
withdraw that anymore. So what if you want to amend you
returns.? So you file an amended return, not to withdraw the
previous return. So the next is what is the period within which
pwede ka mag amend ng return mo.? Provided, That within three
(3) years from the date of such filing, the same may be modified,
changed, or amended, so you are given within 3 years from filing
to modify, change, or amend. So you are given that period.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
It is important to know these because we will connect these
provisions with Article 203.
Provided, further, That no notice for audit or investigation of such
return, statement or declaration has in the meantime been actually
served upon the taxpayer. Meaning your returns may be modified,
changed, or amended at anytime within the said 3year period,
provided hindi ka pa ini-imbestigahan. Hindi pa sila nag-umpisa sa
kanilang investigation and assessment. Now you are now under
investigation or examinations of your return when the BIR will
serve you through the BIR examiner, what we call a Letter of
Authority. The LOA is the Letter of Authority, authorizing the
revenue examiner on the strength of the authority given to the
commissioner that this taxpayer now is under investigation for a
certain tax period.
The LOA should state on what tax period the taxpayer will be
investigated. Hindi pwede na general terms, there must be a
specific period within which the taxpayer will be examined. Hindi
pwede kung sinabi, the tax year 2012 and prior years. Hind pwede
yun. For purposes of due process and to avoid harassment to the
taxpayer, the LOA, otherwise you could challenge the validity of
the assessment.
Now, if the authority is defective and that is serve to the taxpayer,
hindi ka na pwede mag-amend.
So from the filing of the tax returns and payment of the tax by the
taxpayer, you will now undergo this process called assessment. So
you have the provisions 203. This provides for the period within
which the government is allowed to make an assessment and
examination.
SEC. 203. Period of Limitation Upon Assessment and
Collection. - Except as provided in Section 222, internal revenue
taxes shall be assessed within three (3) years after the last day
prescribed by law for the filing of the return, and no proceeding in
court without assessment for the collection of such taxes shall be
begun after the expiration of such period: Provided, That in a case
where a return is filed beyond the period prescribed by law, the
three (3)-year period shall be counted from the day the return was
filed.
For purposes of this Section, a return filed before the last day
prescribed by law for the filing thereof shall be considered as filed
on such last day.
Section 222 provides for the exceptions.
So, in section 203, this will answer the question, when will the 3
year prescriptive period starts to run. The three (3) year period for
assessment purposes will begin to run not on the date of filing, but
on the last day prescribed by law for the filing of the return. So
you the three (3) year prescriptive period to conduct the
assessment. However the counting is not on the date of filing. It is
reckoned on the last day prescribed by law for the filing of the
return, meaning on the deadline.
So if the deadline is April 15, the last day prescribed by law for the
filing of the return, and you file your return, April 10, the counting
would still begin on April 16. It will begin on the last day
prescribed by law for the filing of the return, so after the last day
prescribed by law, it is April 16. SO even if you filed that on April
15, the counting would still begin on April 16. So even of you filed
Page 15
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
your return before or on the deadline, the counting would still
begin after the last day prescribed by law for the filing of the
return.
No proceeding in court without assessment for the collection of
such taxes shall be begun after the expiration of such period. So
meaning, you could not proceed in collecting the tax if there is no
prior assessment, because before you can collect kailangan
dumaan muna sa due process. You inform the taxpayer na merong
tax assessment and kailangan bayaran or meron din demand to
pay the deficiency tax. So no proceeding in court without
assessment may be made, so you cannot collect without an
assessment.
Now, what if the period has lapsed? For tax year 2010, for income
tax individual, the annual return will be April 15, 2011, because
you file your return on April 15, following the end of the tax year.
So for income tax return 2010, the dead line for the filing of the
ITR is April 15, 2011. The 3 year period will
begin to run from April 16, 2011 until April 15, 2014. So this is the
3 year period.
Now for tax year 2008, the deadline for the dead line for the filing
of the ITR is April 15, 2009. The 3 year period will begin to run
from April 16, 2009 until April 15, 2012. Now, if no assessment is
done within the 3 year period, the government can no longer run
against you, because the law states that the assessment notice
should be serve within this 3 year period, otherwise magla-lapsed
na yan. So, kung nagpadala sila outside April 15, the taxpayer can
raise prescription. So you protest the assessment notice and the
requirements for protesting is found under section 228.
Take note that in the service of the notice, even if the notice is
dated April 15 or within the 3 year prescriptive period, for as long
as it was released on the last day of the prescriptive period that is
still valid. Hindi pa sya nagprescribed, for as long as the notice
was release within the 3 year period, even if nereceive ito ng
taxpayer April 30 pa. What is important is that na release or ipina-
labas ng BIR ang notice on the deadline of the 3 year period.
Pasok pa yan sya, the assessment is still valid, even of the receipt
of the notice will take place after April 15 or after the 3 year
period. Ang importante is the released of the BIR and not the
receipt by the taxpayer.
So in case the where a return is filed beyond the period prescribed
by law, the three (3)-year period shall be counted from the day
the return was filed. Meaning, the prescriptive period will be
reckoned on the date of filing, if filed beyond the deadline of April
15, of the succeeding year.
For purposes of this Section, a return filed before the last day
prescribed by law for the filing thereof shall be considered as filed
on such last day. Meaning, if you file it before the deadline, it is
considered as still filed on the last day prescribed by law, which is
April 15, for the purpose of counting the 3 year prescriptive
period.
Now, even if the law was worded as such, if you file your return
after the deadline, how can the 3 year prescriptive period will be
counted? So if for example nagfile and tax payer May 1, the 3 year
prescriptive period will start to be counted May 2 hanagang May 1
ng 3 year period.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Okay, anong nagyayari dito sa 3 year period? During this 3 year
period, the assessment will be made and the taxpayer will be
under investigation. The taxpayer is serve with this LAO, which will
provide on what tax year you are under investigation. The LOA will
provide the authority to the examiner. During this period, there
will be an examination, investigation, audit, etc.
The scope of the examination, investigation, and audit will not
only cover your returns. The LOA will list what are the records you
will need to submit. Kasi yung returns hawak na ng examiner. SO
what will be the basis now of the examiner of the findings of
deficiency? SO the LOA will now list down all the documents and
records needed, such yung mga resibo ng tindahan mo of the tax
year to be investigated. So the Taxpayer is given the opportunity
to address the findings of the examiner. Pag-usapan nila yan,
yung mga findings, whether they will enter into a compromise,
kung ano yung mga findings or mag-rebut amg taxpayer on the
basis na hindi tama yung assessment. Now, kung hindi sila
magkasundo, then meron na ngayong formalities of the
assessment. So magpapadala na ng Pre-Assessment Notice. And
kung hindi pa rin magkasundo sa Pre-assessment, then
magpapadala na ang BIR ng Final Assessment notice. So that is
done during the 3 year period. So kung hindi ka napadalahan ng
assessment notice within that 3 year period, then makakahinga ka
na, the BIR will have no way of collecting or even investigate that
particular taxing period.
Now, by way of exception, the BIR may still run after you to
conduct the assessment, investigate you and collect or demand
any deficiency tax, even outside the 3 year period, the instances
are found under Section 222 of the NIRC, by way of exception.
SEC. 222. Exceptions as to Period of Limitation of
Assessment and Collection of Taxes. -
(a) In the case of a false or fraudulent return with intent to evade
tax or of failure to file a return, the tax may be assessed, or a
proceeding in court for the collection of such tax may be filed
without assessment, at any time within ten (10) years after the
discovery of the falsity, fraud or omission: Provided, That in a
fraud assessment which has become final and executory, the fact
of fraud shall be judicially taken cognizance of in the civil or
criminal action for the collection thereof.
(b) If before the expiration of the time prescribed in Section 203
for the assessment of the tax, both the Commissioner and the
taxpayer have agreed in writing to its assessment after such time,
the tax may be assessed within the period agreed upon.
The period so agreed upon may be extended by subsequent
written agreement made before the expiration of the period
previously agreed upon.
(c) Any internal revenue tax which has been assessed within the
period of limitation as prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a proceeding in court within five
(5) years following the assessment of the tax.
(d) Any internal revenue tax, which has been assessed within the
period agreed upon as provided in paragraph (b) hereinabove,
may be collected by distraint or levy or by a proceeding in court
within the period agreed upon in writing before the expiration of
the five (5) -year period.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
The period so agreed upon may be extended by subsequent
written agreements made before the expiration of the period
previously agreed upon.
(e) Provided, however, That nothing in the immediately preceding
and paragraph (a) hereof shall be construed to authorize the
examination and investigation or inquiry into any tax return filed in
accordance with the provisions of any tax amnesty law or decree.
Now, under section 222 (A), we have 3 instances, one is false
return with intent to evade, second is fraudulent return with intent
to evade and the third is failure to file a return. So we have 3
instances where the period is longer. The period is, the tax may
be assessed, or a proceeding in court for the collection of such tax
may be filed without assessment, at any time within ten (10) years
after the discovery of the falsity, fraud or omission. So the period
is 10 years and the reckoning of the period is from the date of
discovery of the falsity, fraud or omission. In a fraud assessment
which has become final and executory, the fact of fraud shall be
judicially taken cognizance of in the civil or criminal action for the
collection thereof.
Now in case of a false or fraudulent return with intent to evade tax
or of failure to file a return, if the government would subject you
to an assessment, the period is 10 years, form discovery. The
other remedy of the government is to file a criminal case against
you for filing a false return or fraudulent return with intent to
evade the tax or in not filing a return at all. This judicial action,
criminal action or a proceeding in court, may be done without prior
assessment, for as long as it is criminal action for false or
fraudulent return with intent to evade tax or of failure to file a
return. But if you file an action to collect, for reasons of false or
fraudulent return with intent to evade tax or of failure to file a
return, you cannot file such action without prior assessment. So
mag-assess ka dapat and the period is 10 years. But you file a
criminal action, that is no longer under section 222, but it is now
under the provision Section 281 and the prescription is 5 years and
you follow the rules of court.
SEC. 281. Prescription for Violations of any Provision of
this Code. - All violations of any provision of this Code shall
prescribe after Five (5) years.
Prescription shall begin to run from the day of the commission of
the violation of the law, and if the same be not known at the time,
from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty persons and shall begin to run again if
the proceedings are dismissed for reasons not constituting
jeopardy.
The term of prescription shall not run when the offender is absent
from the Philippines.
So, now letter B, can you extend the 3 year period? Example, nag-
examine na ngayon ang BIR, during that 3 year period. Now
within 6 months mag expire na ang 3 year prescriptive period,
ngayon, nagpadala bigla ang BIR ng letter to extend the
prescriptive period, is that allowed.?
Under Section 222 (B) ) If before the expiration of the time
prescribed in Section 203 for the assessment of the tax, both the
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Commissioner and the taxpayer have agreed in writing to its
assessment after such time, the tax may be assessed within the
period agreed upon. SO that is allowed, for as long as the
requirements are met, such as
a. Both the Taxpayer and the Commissioner agreed on the
extension, in writing. (Both magsign)
b. It must be done before the expiration of the 3 year
period
c. It must define how long is the extension (Hind pwede
general waiver of the statute of limitation).
So defined dapat and extention, dapat nakastate kung kalian
magsimulat and hangang kalian ma-extend, the taxpayer should
raise and require that, hindi pwede general waiver. What happens
if the extension is defective? Hindi ma-extend and period.
Paglapsed ng 3 year period, hindi na pwede mag-assess ang BIR.
CARNATION vs. CIR The BIR asked for an extension. It was
signed by Carnation (the taxpayer). The extension period lapsed
and another extension was made. The taxpayer signed it. A third
extension was made and signed by the taxpayer. Later, a notice
of assessment was sent. The taxpayer questioned it. The SC held
that while the extension was in writing and there was an
agreement of the period they fixed within which to extend, it was
not signed by Commissioner. So, it is therefore required that it is
an agreement agreed in writing both by the Commissioner and the
taxpayer. The law did not say to be signed by the taxpayer. It
must be agreed by both. In other words, it is a bilateral and not a
unilateral agreement. These are mandatory provisions.
Case: PHILIPPINE JOURNALISTS ASSOCIATION The
taxpayer was made to sign a waiver of the statutory period of
assessment. The SC disallowed such waiver because the legal
requirement is that there must be an agreement of
extension. There must be a time certain. That waiver is not
effective because there is no period within which you set up and
define and determine the extension. When you required the
taxpayer to sign a waiver of the prescriptive period, the waiver
should provide a period up to when.
Any internal revenue tax which has been assessed within the
period of limitation as prescribed in paragraph (a) hereof may be
collected by distraint or levy or by a proceeding in court within five
(5) years following the assessment of the tax. So this gives us now
the prescriptive period for collection, which is 5 years. SO 3 years
to make an assessment and then 5 years to collect. SO,
Administrative collection is 5years, Civil Action to collect is still 5
years, and criminal action for collection is still 5years, para hindi
karo mailto sa prescriptive period, angdali tandaan.
Any internal revenue tax, which has been assessed within the
period agreed upon as provided in paragraph (b) hereinabove,
may be collected by distraint or levy or by a proceeding in court
within the period agreed upon in writing before the expiration of
the five (5) -year period. So pwede pa bang humirit ang BIR na i-
extend ang period to collect.? That is allowed under paragraph B.
The period so agreed upon may be extended by subsequent
written agreements made before the expiration of the period
previously agreed upon.
So there must be mutual agreement between the taxpayer and the
CIR. In case the taxpayer does not agree, what will happen? In
such a case, the BIR will send a Jeopardy Assessment. Normally,
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
ang taxpayer, binabagalan nila ang pagbigay ng mga documents.
Kulang2x pa jud. Of course the examiner will notice that, because
of the delay caused by the taxpayer, the examiner will issue a
jeopardy assessment based on their existing findings.
Nevertheless, the assessment should still follow the requirements
under the NIRC. Jeopardy Assessment will be issued by the
examiner in cases where there was delay by the taxpayer and
hindi sya pumayag sa extension.
Nothing in the immediately preceding and paragraph (a) hereof
shall be construed to authorize the examination and investigation
or inquiry into any tax return filed in accordance with the
provisions of any tax amnesty law or decree. So if there is a tax
amnesty during the time of investigation or assessment, the
taxpayer is given all the time required to avail of such amnesty. In
this case, mas madali makacollect and BIR, kaya ipa-avail na lang
nila ang taxpayer ng amnesty.
Another exemption is under section 223, where there are
instances of imprescriptability. there are 5 instances.
SEC. 223. Suspension of Running of Statute of Limitations.
- The running of the Statute of Limitations provided in Sections
203 and 222 on the making of assessment and the beginning of
distraint or levy a proceeding in court for collection, in respect of
any deficiency, shall be suspended for the period during which the
Commissioner is prohibited from making the assessment or
beginning distraint or levy or a proceeding in court and for sixty
(60) days thereafter; when the taxpayer requests for a
reinvestigation which is granted by the Commissioner; when the
taxpayer cannot be located in the address given by him in the
return filed upon which a tax is being assessed or
collected:Provided, that, if the taxpayer informs the
Commissioner of any change in address, the running of the
Statute of Limitations will not be suspended; when the
warrant of distraint or levy is duly served upon the taxpayer, his
authorized representative, or a member of his household with
sufficient discretion, and no property could be located; and when
the taxpayer is out of the Philippines.
It is suspended when:
1. The CIR was prohibited from making the assessment or
beginning distraint/levy and for 60 days thereafter
2. Taxpayer requests reinvestigation which is granted by
the CIR
3. Taxpayer cannot be located in address
4. A warrant of distraint and levy is served (not only issued)
and no property could be found
5. Taxpayer is out of the Philippines
SEC. 228. Protesting of Assessment. - When the
Commissioner or his duly authorized representative finds that
proper taxes should be assessed, he shall first notify the taxpayer
of his findings: Provided, however, That a preassessment notice
shall not be required in the following cases:
(a) When the finding for any deficiency tax is the result of
mathematical error in the computation of the tax as appearing on
the face of the return; or(b) When a discrepancy has been
determined between the tax withheld and the amount actually
remitted by the withholding agent; or(c) When a taxpayer who
opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
carried over and automatically applied the same amount claimed
against the estimated tax liabilities for the taxable quarter or
quarters of the succeeding taxable year; or(d) When the excise tax
due on exciseable articles has not been paid; or(e) When the
article locally purchased or imported by an exempt person, such
as, but not limited to, vehicles, capital equipment, machineries and
spare parts, has been sold, traded or transferred to non-exempt
persons.
The taxpayers shall be informed in writing of the law and the facts
on which the assessment is made; otherwise, the assessment shall
be void.
Within a period to be prescribed by implementing rules and
regulations, the taxpayer shall be required to respond to said
notice.
If the taxpayer fails to respond, the Commissioner or his duly
authorized representative shall issue an assessment based on his
findings. cralaw
Such assessment may be protested administratively by filing a
request for reconsideration or reinvestigation within thirty (30)
days from receipt of the assessment in such form and manner as
may be prescribed by implementing rules and regulations. cralaw
Within sixty (60) days from filing of the protest, all relevant
supporting documents shall have been submitted; otherwise, the
assessment shall become final. cralaw
If the protest is denied in whole or in part, or is not acted upon
within one hundred eighty (180) days from submission of
documents, the taxpayer adversely affected by the decision or
inaction may appeal to the Court of Tax Appeals within thirty (30)
days from receipt of the said decision, or from the lapse of one
hundred eighty (180)-day period; otherwise, the decision shall
become final, executory and demandable.
So you have 5 cases where pre-assessment notice is no
longer required.
2 Exceptions to Prior Notice of the Assessment. Pursuant to
Section 228 of the Tax Code, as amended, a PAN shall not be
required in any of the following cases: (i) When the finding for any
deficiency tax is the result of mathematical error in the
computation of the tax appearing on the face of the tax return
filed by the taxpayer; or (ii) When a discrepancy has been
determined between the tax withheld and the amount actually
remitted by the withholding agent; or (iii) When a taxpayer who
opted to claim a refund or tax credit of excess creditable
withholding tax for a taxable period was determined to have
carried over and automatically applied the same amount claimed
against the estimated tax liabilities for the taxable quarter or
quarters of the succeeding taxable year; or (iv)When the excise
tax due on excisable articles has not been paid; or (v) When an
article locally purchased or imported by an exempt person, such
as, but not limited to, vehicles, capital equipment, machineries and
spare parts, has been sold, traded or transferred to non-exempt
persons.
So these cases, wala ng PAN, the BIR will issued directly to the
taxpayer the Final Assessment Notice (FAN).
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Under RR 18-2013 they remove now the notice of
informal conference.
3.1 Mode of procedure in the issuance of a deficiency tax
assessment:
3.1.1 Preliminary Assessment Notice (PAN). If after review and
evaluation by the Commissioner or his duly authorized
representative, as the case may be, it is determined that there
exists sufficient basis to assess the taxpayer for any deficiency tax
or taxes, the said Office shall issue to the taxpayer a Preliminary
Assessment Notice (PAN) for the proposed assessment. It shall
show in detail the facts and the law, rules and regulations, or
jurisprudence on which the proposed assessment is based (see
illustration in ANNEX A hereof). If the taxpayer fails to respond
within fifteen (15) days from date of receipt of the PAN, he shall
be considered in default, in which case, a Formal Letter of
Demand and Final Assessment Notice (FLD/FAN) shall be issued
calling for payment of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties.
Both the PAN and FAN must follow the requirements of the law,
under section 228, it must be in writing and must provide the fact
and the law to which it was based, otherwise, the taxpayer may
challenge such an assessment.
So upon issuance of the PAN, the taxpayer will be required to
respond within 15 days from date of receipt of the PAN, he shall
be considered in default, in which case, a Formal Letter of
Demand and Final Assessment Notice (FLD/FAN) shall be issued
calling for payment of the taxpayer's deficiency tax liability,
inclusive of the applicable penalties. So kung hindi ka magrespond
the BIR will send you another notice, the FAN.
Kapag nag-issue na ng FAN, what is now your remedy? Such
assessment may be contested administratively, by filing a
reconsideration or by filing a request for reinvestigation.
3.1.3 Formal Letter of Demand and Final Assessment Notice
(FLD/FAN). The Formal Letter of Demand and Final Assessment
Notice (FLD/FAN) shall be issued by the Commissioner or his duly
authorized representative. The FLD/FAN calling for payment of the
taxpayer's deficiency tax or taxes shall state the facts, the law,
rules and regulations, or jurisprudence on which the assessment is
based; otherwise, the assessment shall be void
So you have 30 days to avail of the administrative remedies. You
have basically 2 administrative remedies, they are found under RR
18-2013
3.1.4 Disputed Assessment. The taxpayer or its authorized
representative or tax agent may protest administratively against
the aforesaid FLD/FAN within thirty (30) days from date of receipt
thereof. The taxpayer protesting an assessment may file a written
request for reconsideration or reinvestigation defined as follows:
(i) Request for reconsideration refers to a plea of re-
evaluation of an assessment on the basis of existing records
without need of additional evidence. It may involve both a
question of fact or of law or both.
(ii) Request for reinvestigation refers to a plea of re-
evaluation of an assessment on the basis of newly discovered or
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
additional evidence that a taxpayer intends to present in the
reinvestigation. It may also involve a question of fact or of law or
both.
You file these administrative remedies with the Commissioner of
the Internal Revenue (CIR)
The taxpayer shall state in his protest (i) the nature of protest
whether reconsideration or reinvestigation, specifying newly
discovered or additional evidence he intends to present if it is a
request for reinvestigation, (ii) date of the assessment notice, and
(iii) the applicable law, rules and regulations, or jurisprudence on
which his protest is based, otherwise, his protest shall be
considered void and without force and effect.
If there are several issues involved in the FLD/FAN but the
taxpayer only disputes or protests against the validity of some of
the issues raised, the assessment attributable to the undisputed
issue or issues shall become final, executory and demandable; and
the taxpayer shall be required to pay the deficiency tax or taxes
attributable thereto, in which case, a collection letter shall be
issued to the taxpayer calling for payment of the said deficiency
tax or taxes, inclusive of the applicable surcharge and/or interest.
If there are several issues involved in the disputed assessment and
the taxpayer fails to state the facts, the applicable law, rules and
regulations, or jurisprudence in support of his protest against
some of the several issues on which the assessment is based, the
same shall be considered undisputed issue or issues, in which
case, the assessment attributable thereto shall become final,
executory and demandable; and the taxpayer shall be required to
pay the deficiency tax or taxes attributable thereto and a collection
letter shall be issued to the taxpayer calling for payment of the
said deficiency tax, inclusive of the applicable surcharge and/or
interest.
For requests for reinvestigation, the taxpayer shall submit all
relevant supporting documents in support of his protest within
sixty (60) days from date of filing of his letter of protest,
otherwise, the assessment shall become final. The term relevant
supporting documents refer to those documents necessary to
support the legal and factual bases in disputing a tax assessment
as determined by the taxpayer. The sixty (60)-day period for the
submission of all relevant supporting documents shall not apply to
requests for reconsideration. Furthermore, the term the
assessment shall become final shall mean the taxpayer is barred
from disputing the correctness of the issued assessment by
introduction of newly discovered or additional evidence, and the
FDDA shall consequently be denied.
If the taxpayer fails to file a valid protest against the FLD/FAN
within thirty (30) days from date of receipt thereof, the
assessment shall become final, executory and demandable. No
request for reconsideration or reinvestigation shall be granted on
tax assessments that have already become final, executory and
demandable.
If the protest is denied, in whole or in part, by the Commissioners
duly authorized representative, the taxpayer may either: (i) appeal
to the Court of Tax Appeals (CTA) within thirty (30) days from
date of receipt of the said decision; or (ii) elevate his protest
through request for reconsideration to the Commissioner within
thirty (30) days from date of receipt of the said decision. No
request for reinvestigation shall be allowed in administrative
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
appeal and only issues raised in the decision of the Commissioners
duly authorized representative shall be entertained by the
Commissioner.
If the protest is not acted upon by the Commissioners duly
authorized representative within one hundred eighty (180) days
counted from the date of filing of the protest in case of a request
reconsideration; or from date of submission by the taxpayer of the
required documents within sixty (60) days from the date of filing
of the protest in case of a request for reinvestigation, the taxpayer
may either: (i) appeal to the CTA within thirty (30) days after the
expiration of the one hundred eighty (180)-day period; or (ii)
await the final decision of the Commissioners duly authorized
representative on the disputed assessment.
If the protest or administrative appeal, as the case may be, is
denied, in whole or in part, by the Commissioner, the taxpayer
may appeal to the CTA within thirty (30) days from date of receipt
of the said decision. Otherwise, the assessment shall become final,
executory and demandable. A motion for reconsideration of the
Commissioners denial of the protest or administrative appeal, as
the case may be, shall not toll the thirty (30)-day period to appeal
to the CTA.
If the protest or administrative appeal is not acted upon by the
Commissioner within one hundred eighty (180) days counted from
the date of filing of the protest, the taxpayer may either: (i)
appeal to the CTA within thirty (30) days from after the expiration
of the one hundred eighty (180)-day period; or (ii) await the final
decision of the Commissioner on the disputed assessment and
appeal such final decision to the CTA within thirty (30) days after
the receipt of a copy of such decision.
It must be emphasized, however, that in case of inaction on
protested assessment within the 180-day period, the option of the
taxpayer to either: (1) file a petition for review with the CTA within
30 days after the expiration of the 180-day period; or (2) await
the final decision of the Commissioner or his duly authorized
representative on the disputed assessment and appeal such final
decision to the CTA within 30 days after the receipt of a copy of
such decision, are mutually exclusive and the resort to one bars
the application of the other.
Thereafter, the end and basically the last notice will be called the
FAN or Final Assessment Notice.
3.1.5 Final Decision on a Disputed Assessment (FDDA). The
decision of the Commissioner or his duly authorized representative
shall state the (i) facts, the applicable law, rules and regulations,
or jurisprudence on which such decision is based, otherwise, the
decision shall be void, and (ii) that the same is his final decision
Now, take note that in case of in-action by the CIR, the taxpayer
has 2 options, which are:
(i) appeal to the CTA within thirty (30) days after the
expiration of the one hundred eighty (180)-day
period; or
(ii) await the final decision of the Commissioners duly
authorized representative on the disputed
assessment.
Once you avail of the remedy to go directly with the CTA, you
cannot avail of the second remedy, which is to await the decision
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
of the CIR. The remedies are exclusive. So if you await the
decision of the CIR, you will still have that fresh 30 day to appeal
to the CTA.
Sa CTA naman, it will still be first brought to the CTA via division.
Then go to the CTA En Banc. This is now a judicial remedies of the
taxpayer.
Now when these are done, we will now go to the collection
remedies.
January 13, 2015
Now lets take up the remedies for collection.
So as we have discussed, a part of the tax administration involves
the assessment and collection of taxes.
So the process starts with the:
1. Filing of the tax returns and the payment of the tax on
the basis of the return filed
2. The returns will be subject to an assessment we have
discussed this lengthily how the assessment takes place
3. And when the assessment becomes final and executory,
this time, collection proceedings follow
Now, under the NIRC the collection remedies on the part of the
government is classified into 2:
1. Administrative remedies in collecting the tax
2. Judicial remedies in collecting the tax
Now the collection proceedings, you have this in 205, providing
the mode of collection:
SEC. 205. Remedies for the Collection of Delinquent Taxes. - The
civil remedies for the collection of internal revenue taxes, fees or
charges, and any increment thereto resulting from delinquency
shall be:
(a) By distraint of goods, chattels, or effects, and other personal
property of whatever character, including stocks and other
securities, debts, credits, bank accounts and interest in and rights
to personal property, and
by levy upon real property and interest in rights to real property;
and
(b) By civil or criminal action.
These are the judicial remedies.
Now, we have these 2 remedies, administrative:
1. Distraint
2. Levy
Judicial:
1. Criminal action
2. Civil action
Remedies are not only limited to these, including judicial. Now the
next question involves now, if the government resorts to a judicial
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
remedy to collect by filing a civil case to collect the tax, is it
precluded from using administrative remedies?
Either of these remedies or both simultaneously may be pursued in
the discretion of the authorities charged with the collection of such
taxes
So the government, therefore, pursuing the remedies to collect,
can pursue all of these remedies either of these or both or all of
them, these are all allowed on the part of the government.
Provided, however, That the remedies of distraint and levy shall
not be availed of where the amount of tax involve is not more
than One hundred pesos (P100).
This is obvious, the resources on the part of the government to
collect, tapos sisingilin molang P100. But this has to be updated.
Again, we have mentioned that not all taxpayers go through the
assessment. Kasi when the government will go over the returns,
ito lang pala makuha naming na deficiency, they will forego it
because the amount of resources and energy, then you end up
with P100 lang pala yung deficiency. Lugi ang govt jan.
The judgment in the criminal case shall not only impose the
penalty but shall also order payment of the taxes subject of the
criminal case as finally decided by the Commissioner.
Similar to any criminal action in accordance with the rules of
criminal procedure.
1. After the trial on the merits the court will render
judgment
2. And the court will make a conviction or acquittal
3. Regardless of the judgment (conviction or acquittal) the
court will also order the payment the of the taxes subject
of the criminal case as finally decided by the
commissioner
Because the filing the criminal action is a mode of collection. When
we go now to the action under:
SEC. 281. Prescription for Violations of any Provision of this Code.
- All violations of any provision of this Code shall prescribe after
Five (5) years.
Prescription shall begin to run from the day of the commission of
the violation of the law, and if the same be not known at the time,
from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty persons and shall begin to run again if
the proceedings are dismissed for reasons not constituting
jeopardy.
The term of prescription shall not run when the offender is absent
from the Philippines.
This will not require a prior assessment, unlike pursuing the
administrative remedies to collect as well as the civil action, you
could not collect the taxes by these remedies unless there is a
prior assessment. Meaning the taxpayer went thru the regular due
process requirement informing him of a deficiency notice.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
In a criminal action, there is no need of informing him na ito yung
finding naming. The criminal complaint will provide a basis for the
violation as well as the tax that will be collected by reason of that
violation. When there is probable cause, then, a criminal
information is filed in court. Then pretrial will ensue allowing
prosecution to prove, then accused, then the court will render
judgment. Then the judgment in that case, either conviction or
acquittal shall also order the payment of the taxes subject of the
criminal case.
Sec. 205 The Bureau of Internal Revenue shall advance the
amounts needed to defray costs of collection by means of civil or
criminal action, including the preservation or transportation of
personal property distrained and the advertisement and sale
thereof, as well as of real property and improvements thereon.
Then you have these principles under 205 in connection with the
collection.
So what are these remedies?
1. Distraint
The administrative remedies to collect (distraint or levy) is similar
to your rule 39, when you have a judgment creditor having a
favourable judgment will not pursue execution of the judgment. So
a sheriff will be the one performing the execution and will run
after the properties of the judgment debtor. So the sheriff will
garnish bank accounts, run after personal properties, levy on real
properties and go to the ROD to satisfy the unpaid judgment. In
our case, the unpaid deficiency tax. So ganun din yung process.
So under 206, the context of the distraint of personal property will
be:
1. Actual
2. Constructive similar to your rule on preliminary
attachment
SEC. 206. Constructive Distraint of the Property of A Taxpayer. -
To safeguard the interest of the Government, the Commissioner
may place under constructive distraint the property of a delinquent
taxpayer or any taxpayer who, in his opinion, is:
retiring from any business subject to tax, or
intending:
o to leave the Philippines or
o to remove his property therefrom or
o to hide or conceal his property or
o to perform any act tending to obstruct the
proceedings for collecting the tax due or which
may be due from him.
But not in all instances will constructive distraint be allowed. SO
only in these instances where constructive distraint can be made.
This is to safeguard the interestof the government. So when the
BIR notices that the taxpayer is hiding or concealing property, so
when the assessment is on-going, medyo umiiwas na yung
taxpayer, then the government will pursue a constructive distraint.
How is this done?
The constructive distraint of personal property shall be affected by
requiring the taxpayer or any person having possession or control
of such property to sign a receipt covering the property distrained
and obligate himself to preserve the same intact and unaltered
and not to dispose of the same ;in any manner whatever, without
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
the express authority of the Commissioner.
So its the same as preliminary attachment, to protect your
interest, because at the end of it, in attachment, when trial is on-
going, tatawa lang yung judgment debtor pero yung iba tinatago
na yung properties, pagdating ng judgment wala ka ng makuha.
You end up with nothing. So that holds true also in the case of the
government. So to protect the governments interest, they will
pursue constructive distraint para when the assessment becomes
final, wala na silang mabira, there will be no properties they can
pursue to satisfy the interest of the government. So a notice is
served to the taxpayer, or the person holding the property of the
taxpayer, that the property in his possession will be under distraint
with an obligation to hold and preserve the property intact and
could not dispose or alter whatsoever.
In case the taxpayer or the person having the possession and
control of the property sought to be placed under constructive
distraint refuses or fails to sign the receipt herein referred to, the
revenue officer effecting the constructive distraint shall:
proceed to prepare a list of such property and,
in the presence of two (2) witnessed, leave a copy
thereof in the premises where the property distrained is
located,
after which the said property shall be deemed to have
been placed under constructive distraint.
So if he refuses, there is also a procedure for that. So in the event
now, the assessment becomes final, then the interest of the
government is protected and now you can pursue ACTUAL
DISTRAINT
SEC. 207. Summary Remedies. -
(A) Distraint of Personal Property. - Upon the failure of the person
owing any delinquent tax or delinquent revenue to pay the same
at the time required, the Commissioner or his duly authorized
representative, if the amount involved is in excess of One million
pesos (P1,000,000), or the Revenue District Officer, if the amount
involved is One million pesos (P1,000,000) or less, shall seize and
distraint any goods, chattels or effects, and the personal property,
including stocks and other securities, debts, credits, bank
accounts, and interests in and rights to personal property of such
persons ;in sufficient quantity to satisfy the tax, or charge,
together with any increment thereto incident to delinquency, and
the expenses of the distraint and the cost of the subsequent sale.
A report on the distraint shall, within ten (10) days from receipt of
the warrant, be submitted by the distraining officer to the Revenue
District Officer, and to the Revenue Regional Director: Provided,
That the Commissioner or his duly authorized representative shall,
subject to rules and regulations promulgated by the Secretary of
Finance, upon recommendation of the Commissioner, have the
power to lift such order of distraint: Provided, further, That a
consolidated report by the Revenue Regional Director may be
required by the Commissioner as often as necessary.
So same sa rule 39 pa rin, the property will be seized, or actual
taking, the property will be sold at a public auction. Proceeds will
be applied to deficiencty. Pagkulang, futher distraint. Pagsobra, so
the amount to be collected is 500k, the auction proceeds are 800k,
you have to RETURN the excess, apply the proceeds sufficient for
the tax liability.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
SEC. 208. Procedure for Distraint and Garnishment. - The officer
serving the warrant of distraint shall make or cause to be made an
account of the goods, chattels, effects or other personal property
distrained, a copy of which, signed by himself, shall be left either
with the owner or person from whose possession such goods,
chattels, or effects or other personal property were taken, or at
the dwelling or place of business of such person and with someone
of suitable age and discretion, to which list shall be added a
statement of the sum demanded and note of the time and place of
sale.
Stocks and other securities shall be distrained by serving a copy of
the warrant of distraint upon the taxpayer and upon the president,
manager, treasurer or other responsible officer of the corporation,
company or association, which issued the said stocks or securities.
Debts and credits shall be distrained by leaving with the person
owing the debts or having in his possession or under his control
such credits, or with his agent, a copy of the warrant of distraint.
The warrant of distraint shall be sufficient authority to the person
owning the debts or having in his possession or under his control
any credits belonging to the taxpayer to pay to the Commissioner
the amount of such debts or credits.
Bank accounts shall be garnished by serving a warrant of
garnishment upon the taxpayer and upon the president, manager,
treasurer or other responsible officer of the bank. Upon receipt of
the warrant of garnishment, the bank shall tun over to the
Commissioner so much of the bank accounts as may be sufficient
to satisfy the claim of the Government.
The garnishment is in the case of bank accounts. The distraint will
not only be upon the personal property, but may go to the bank
accounts of the taxpayer. Go to the bank, serve the notice and the
bank will fund, after a certain period, the bank will release such
amount to cover the liability. Excess will stay with taxpayer.
SEC. 209. Sale of Property Distrained and Disposition of Proceeds.
- The Revenue District Officer or his duly authorized
representative, other than the officer referred to in Section 208 of
this Code shall, according to rules and regulations prescribed by
the Secretary of Finance, upon recommendation of the
Commissioner, forthwith cause a notification to be exhibited in not
less than two (2) public places in the municipality or city where the
distraint is made, specifying; the time and place of sale and the
articles distrained. The time of sale shall not be less than twenty
(20) days after notice. One place for the posting of such notice
shall be at the Office of the Mayor of the city or municipality in
which the property is distrained.
At the time and place fixed in such notice, the said revenue officer
shall sell the goods, chattels, or effects, or other personal
property, including stocks and other securities so distrained, at
public auction, to the highest bidder for cash, or with the approval
of the Commissioner, through duly licensed commodity or stock
exchanges.
In the case of Stocks and other securities, the officer making the
sale shall execute a bill of sale which he shall deliver to the buyer,
and a copy thereof furnished the corporation, company or
association which issued the stocks or other securities. Upon
receipt of the copy of the bill of sale, the corporation, company or
association shall make the corresponding entry in its books,
transfer the stocks or other securities sold in the name of the
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
buyer, and issue, if required to do so, the corresponding
certificates of stock or other securities.
Any residue over and above what is required to pay the entire
claim, including expenses, shall be returned to the owner of the
property sold. The expenses chargeable upon each seizure and
sale shall embrace only the actual expenses of seizure and
preservation of the property pending ;the sale, and no charge shall
be imposed for the services of the local internal revenue officer or
his deputy.
So the property will be sold at a public auction, proceeds applied
to the delinquency, and any excess will be returned.
SEC. 210. Release of Distrained Property Upon Payment Prior to
Sale. - If at any time prior to the consummation of the sale all
proper charges are paid to the officer conducting the sale, the
goods or effects distrained shall be restored to the owner.
SEC. 211. Report of Sale to Bureau of Internal Revenue. - Within
two (2) days after the sale, the officer making the same shall
make a report of his proceedings in writing to the Commissioner
and shall himself preserve a copy of such report as an official
record.
SEC. 212. Purchase by Government at Sale Upon Distraint. - When
the amount bid for the property under distraint is not equal to the
amount of the tax or is very much less than the actual market
value of the articles offered for sale, the Commissioner or his
deputy may purchase the same in behalf of the national
Government for the amount of taxes, penalties and costs due
thereon.
Property so purchased may be resold by the Commissioner or his
deputy, subject to the rules and regulations prescribed by the
Secretary of Finance, the net proceeds therefrom shall be remitted
to the National Treasury and accounted for as internal revenue.
So if the initial distraint will not satisfy the liabilities, so distraint
more the properties. That holds true also for the case of levy.
Now, the case for levy of RP, what is pursued is real properties
So these are the provisions, kalat sila.
So in the case of levy, what is pursued is the RP of the taxpayer.
Like in rule 39, the sheriff goes to the ROD, titingnan niya if may
properties is taxpayer. If meron, you annotate the claim of
government on the properties. There will be now a notice of
auction sale, advertisement of sale, and on auction date the
properties are now in auction and so now sold to the highest
bidder. When sold now to the HB, the sale will be annotated with
the ROD for purposes of counting the 1 YEAR REDEMPTION
PERIOD. During the period, the taxpayer may redeem the property
by paying the obligation, then the property will be returned to the
taxpayer. If no redemption and the period has lapsed, then the
final deed to the HB, if it is RP then some other taxes have to be
paid and it is only in the final deed you can now transfer the RP to
the buyer. So in the case of levy
Sec. 207 (B) Levy on Real Property. - After the expiration of the
time required to pay the delinquent tax or delinquent revenue as
prescribed in this Section, real property may be levied upon,
before simultaneously or after the distraint of personal property
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
belonging to the delinquent. To this end, any internal revenue
officer designated by the Commissioner or his duly authorized
representative shall prepare a duly authenticated certificate
showing the name of the taxpayer and the amounts of the tax and
penalty due from him. Said certificate shall operate with the force
of a legal execution throughout the Philippines.
Levy shall be affected by writing upon said certificate a description
of the property upon which levy is made. At the same time,
written notice of the levy shall be mailed to or served upon the
Register of Deeds for the province or city where the property is
located and upon the delinquent taxpayer, or if he be absent from
the Philippines, to his agent or the manager of the business in
respect to which the liability arose, or if there be none, to the
occupant of the property in question.
In case the warrant of levy on real property is not issued before or
simultaneously with the warrant of distraint on personal property,
and the personal property of the taxpayer is not sufficient to
satisfy his tax delinquency, the Commissioner or his duly
authorized representative shall, within thirty (30) days after
execution of the distraint, proceed with the levy on the taxpayer's
real property.
Within ten (10) days after receipt of the warrant, a report on any
levy shall be submitted by the levying officer to the Commissioner
or his duly authorized representative: Provided, however, That a
consolidated report by the Revenue Regional Director may be
required by the Commissioner as often as necessary: Provided,
further, That the Commissioner or his duly authorized
representative, subject to rules and regulations promulgated by
the Secretary of Finance, upon recommendation of the
Commissioner, shall have the authority to lift warrants of levy
issued in accordance with the provisions hereof.
SEC. 213. Advertisement and Sale. - Within twenty (20) days after
levy, the officer conducting the proceedings shall proceed to
advertise the property or a usable portion thereof as may be
necessary to satisfy the claim and cost of sale; and such
advertisement shall cover a period of a least thirty (30) days. It
shall be effectuated by posting a notice at the main entrance of
the municipal building or city hall and in public and conspicuous
place in the barrio or district in which the real estate lies and ;by
publication once a week for three (3) weeks in a newspaper of
general circulation in the municipality or city where the property is
located. The advertisement shall contain a statement of the
amount of taxes and penalties so due and the time and place of
sale, the name of the taxpayer against whom taxes are levied, and
a short description of the property to be sold. At any time before
the day fixed for the sale, the taxpayer may discontinue all
proceedings by paying the taxes, penalties and interest. If he does
not do so, the sale shall proceed and shall be held either at the
main entrance of the municipal building or city hall, or on the
premises to be sold, as the officer conducting the proceedings
shall determine and as the notice of sale shall specify.
Within five (5) days after the sale, a return by the distraining or
levying officer of the proceedings shall be entered upon the
records of the Revenue Collection Officer, the Revenue District
officer and the Revenue Regional Director. The Revenue Collection
Officer, in consultation with the Revenue district Officer, shall then
make out and deliver to the purchaser a certificate from his
records, showing the proceedings of the sale, describing the
property sold stating the name of the purchaser and setting out
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
the exact amount of all taxes, penalties and interest: Provided,
however, That in case the proceeds of the sale exceeds the claim
and cost of sale, the excess shall be turned over to the owner of
the property.
The Revenue Collection Officer, upon approval by the Revenue
District Officer may, out of his collection, advance an amount
sufficient to defray the costs of collection by means of the
summary remedies provided for in this Code, including ;the
preservation or transportation in case of personal property, and
the advertisement and subsequent sale, both in cases of personal
and real property including improvements found on the latter. In
his monthly collection reports, such advances shall be reflected
and supported by receipts.
Now if you would notice, if you would compare proceedings
pareho lang din ito sa extrajudicial foreclose of real estate
mortgage under act 3139 in your landti. The same process yan
even under rule 39. So the proceedings are not new, same as
landti and rule 39 for the foreclosure of real estate.
SEC. 214. Redemption of Property Sold. - Within one (1) year from
the date of sale, the delinquent taxpayer, or any one for him, shall
have the right of paying to the Revenue District Officer the
amount of the public taxes, penalties, and interest thereon from
the date of delinquency to the date of sale, together with interest
on said purchase price at the rate of fifteen percent (15%) per
annum from the date of purchase to the date of redemption, and
such payment shall entitle the person paying to the delivery of the
certificate issued to the purchaser and a certificate from the said
Revenue District Officer that he has thus redeemed the property,
and the Revenue District Officer shall forthwith pay over to the
purchaser the amount by which such property has thus been
redeemed, and said property thereafter shall be free form the lien
of such taxes and penalties.
The owner shall not, however, be deprived of the possession of
the said property and shall be entitled to the rents and other
income thereof until the expiration of the time allowed for its
redemption.
If there is no redemption
SEC. 202. Final Deed to Purchaser. - In case the taxpayer shall not
redeem the property as herein provided the Revenue District
Officer shall, as grantor, execute a deed conveying to the
purchaser so much of the property as has been sold, free from all
liens of any kind whatsoever, and the deed shall succintly recite all
the proceedings upon which the validity of the sale depends.
In case there is no bidder
SEC. 215. Forfeiture to Government for Want of Bidder. - In case
there is no bidder for real property exposed for sale as herein
above provided or if the highest bid is for an amount insufficient to
pay the taxes, penalties and costs, the Internal Revenue Officer
conducting the sale shall declare the property forfeited to the
Government in satisfaction of the claim in question and within two
(2) days thereafter, shall make a return of his proceedings and the
forfeiture which shall be spread upon the records of his office. It
shall be the duty of the Register of Deeds concerned, upon
registration with his office of any such declaration of forfeiture, to
transfer the title of the property forfeited to the Government
without the necessity of an order from a competent court.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Within one (1) year from the date of such forfeiture, the taxpayer,
or any one for him may redeem said property by paying to the
Commissioner or the latter's Revenue Collection Officer the full
amount of the taxes and penalties, together with interest thereon
and the costs of sale, but if the property be not thus redeemed,
the forfeiture shall become absolute.
Kulang
SEC. 217. Further Distraint or Levy. - The remedy by distraint of
personal property and levy on realty may be repeated if necessary
until the full amount due, including all expenses, is collected.
Now another important rule or principle in connection with
collection is the interfacing now of the principle of injunction.
When the government now pursue collection proceedings, and you
go to court to ask for TRO, or preliminary or permanent injunction
to restrain the collection of taxes, you have
SEC. 218. Injunction not Available to Restrain Collection of Tax. -
No court shall have the authority to grant an injunction to restrain
the collection of any national internal revenue tax, fee or charge
imposed by this Code.
Do not forget that principle. So this is a defense the BIR can use,
injunction as a rule is not available to restrain the collection of
taxes. By way of exception it can be done unless under
meritorious cases. But it is only by way of exception that the court
will grant injunction.
Now another remedy is the enforcement of forfeiture. Apart from
this distraint and levy, you have this enforcement of forfeiture
SEC. 224. Remedy for Enforcement of Forfeitures. - The forfeiture
of chattels and removable fixtures of any sort shall be enforced by
the seizure and sale, or destruction, of the specific forfeited
property. The forfeiture of real property shall be enforced by a
judgment of condemnation and sale in a legal action or
proceeding, civil or criminal, as the case may require.
Now, forfeiture involves the divestiture and taking of property for
violation of the NIRC the BIR or government may proceed against
the properties or taxable properties of the taxpayer. Like for
example, the excise tax on alcohol products or cigarettes. *story*
After seizure, what will they do? Under Sec 224 [even under tariff
and customs code], then because the purpose of forfeiture is to
divest and seize the property in favor of the government. So after
seizing the properties will now be sold and you will have the
proceeds and the proceeds will be applied. Will there be
something returned to the taxpayer? No more, in case of forfeiture
and there is a sale, ALL THE PROCEEDS WILL BE TO THE
GOVERNMENT, NOTHING RETURNED TO THE TAXPAYER.
So you have
SEC. 225. When Property to be Sold or Destroyed. - Sales of
forfeited chattels and removable fixtures shall be effected, so far
as practicable, in the same manner and under the same conditions
as the public notice and the time and manner of sale as are
prescribed for sales of personal property distrained for the non-
payment of taxes.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Distilled spirits, liquors, cigars, cigarettes, other manufactured
products of tobacco, and all apparatus used in or about the illicit
production of such articles may, upon forfeiture, be destroyed by
order of the Commissioner, when the sale of the same for
consumption or use would be injurious to public health or
prejudicial to the enforcement of the law.
All other articles subject to excise tax, which have been
manufactured or removed in violation of this Code, as well as dies
for the printing or making of internal revenue stamps and labels
which are in imitation of or purport to be lawful stamps, or labels
may, upon forfeiture, be sold or destroyed in the discretion of the
Commissioner.
Forfeited property shall not be destroyed until at least twenty (20)
days after seizure.
Now in the case of real property, its the same as levy. When you
forfeit the real property, enforced by a judgment of condemnation
in a legal action or proceedings civil or criminal, you may now
claim the unpaid taxes against the property and you would like to
pursue on RP, then it goes to the same proceedings as levy. Go to
the ROD and annotate, or the RP itself will be condemned in favor
of the government.
Ang nagkaiba lang sa distraint, after applying for the liabilities or
the tax obligation against the proceeds, the excess will never be
returned (under forfeiture); unlike in distraint or levy, you will
return the taxes collected in excess.
In the forfeiture proceedings, it is not only the taxable articles that
are seized, it includes the mode of transportation. So kung motor
vehicle or conveyed by a vessel, those shall be subject to seizure.
That holds true also in seizure or forfeiture proceedings under the
tariff and customs code (TCC).
The forfeiture proceeding (whether under NIRC or TCC) is a
proceeding in rem, it is directed on the property itself, on the
vehicle, vessel or aircraft. So you have a case in cusoms RP v. MB
pangalan ng barko with 1000 cases of J. Walker Spirits So like the
provisions in the TCC, all apparatus used in or about the illicit
production are seized. *stories in Zamboanga smuggled rice*
Now another remedy is the enforcement of a tax lien. So the tax
lien comes in when the liability arises
SEC. 219. Nature and Extent of Tax Lien. - If any person,
corporation, partnership, joint-account (cuentas en participacion),
association or insurance company liable to pay an internal revenue
tax, neglects or refuses to pay the same after demand, the
amount shall be a lien in favor of the Government of the
Philippines from the time when the assessment was made by the
Commissioner until paid, with interests, penalties, and costs that
may accrue in addition thereto upon all property and rights to
property belonging to the taxpayer:
A tax lien is a legal claim or charge to the property whether RP or
PP as a security as payment of some debt or obligation. So you
have there the definition.
So in the enforcement of the lien, they may proceed with distraint
or levy depending if real or personal property.
Provided, That this lien shall not be valid against any mortgagee
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
purchaser or judgment creditor until notice of such lien shall be
filed by the Commissioner in the office of the Register of Deeds of
the province or city where the property of the taxpayer is situated
or located.
So to perfect the lien or tax claim of the government, the
government must have that lien registered. Now, the lien will not
be effective if there is an existing mortgage or encumbrance, or a
purchaser, or judgment creditor able to pursue the claim ahead of
the government. In other words, pag may naka una na doon sa
property, the lien will never be effective. The government will
become a junior encumbrancer or claimant. This is the effect when
the government would pursue a tax claim for purposes of the nIRC
to collect internal revenue taxes. In other words, under 219 if
there is another claimant ahead of the government, the lien
becomes inferior to all other claims.
When we go to local tax or real property tax, and TCC, the lien of
the government for these LOCAL TAXES AND CUSTOMS
DUTIES will be SUPERIOR to all other claim. You will notice that a
real property is encumbered, may existing mortgage, the
mortgagor does not take care of its annual RPT obligations. The
local government now will put this property under auction because
of delinquency in the payment of tax. Can the property owner now
including the mortgagee (bank) complain and insist na hindi niyo
pwede ibenta yan kasi nakauna na kami jan? that does not hold
true in the caseof real property tax, because the lien of the
government is superior to all other claims. So even when there is
an existing encumbrances, pag hindi bayad ang RPT, the
governments claim is superior to all other claim.
In pursuit of the proceedings undertaken by government
SEC. 220. Form and Mode of Proceeding in Actions Arising under
this Code. - Civil and criminal actions and proceedings instituted in
behalf of the Government under the authority of this Code or other
law enforced by the Bureau of Internal Revenue shall be brought
in the name of the Government of the Philippines and shall be
conducted by legal officers of the Bureau of Internal Revenue but
no civil or criminal action for the recovery of taxes or the
enforcement of any fine, penalty or forfeiture under this Code shall
be filed in court without the approval of the Commissioner.
January 15, 2015
So far we have already covered a number of Administrative
Remedies as part of the government to collect taxes. We have
mentioned on the remedy of
1. distraint of personal property which may either be
constructive or actual distraint;
2. Then you have the remedy of levy of real property;
3. Then you have the enforcement of forfeiture;
4. We have also the enforcement of tax liens.
Do not forget also the remedy under section 218, in connection
with injunction, that injunction is not available to distraint or
enjoin the collection of taxes.
SEC. 218. Injunction not Available to Restrain Collection of
Tax. - No court shall have the authority to grant an injunction to
restrain the collection of any national internal revenue tax, fee or
charge imposed by this Code.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So another remedy is under section 204, entering into a
compromise. So that is one mode of collection of taxes in which
the government will result into, by entering into a compromise.
Now, the rules or the manner within which the government may
run after the taxpayer is by entering into a compromise following
the procedure under section 204.
SEC. 204. Authority of the Commissioner to Compromise,
Abate and Refund or Credit Taxes. - The Commissioner may -
(A) Compromise the payment of any internal revenue tax, when:
(1) A reasonable doubt as to the validity of the claim against the
taxpayer exists; or
(2) The financial position of the taxpayer demonstrates a clear
inability to pay the assessed tax.
The compromise settlement of any tax liability shall be subject to
the following minimum amounts:
For cases of financial incapacity, a minimum compromise rate
equivalent to ten percent (10%) of the basic assessed tax; and
For other cases, a minimum compromise rate equivalent to forty
percent (40%) of the basic assessed tax.
Where the basic tax involved exceeds One million pesos
(P1,000.000) or where the settlement offered is less than the
prescribed minimum rates, the compromise shall be subject to the
approval of the Evaluation Board which shall be composed of the
Commissioner and the four (4) Deputy Commissioners.
(B) Abate or cancel a tax liability, when:
(1) The tax or any portion thereof appears to be unjustly or
excessively assessed; or
(2) The administration and collection costs involved do not justify
the collection of the amount due.
All criminal violations may be compromised except: (a) those
already filed in court, or (b) those involving fraud.
(C) Credit or refund taxes erroneously or illegally received or
penalties imposed without authority, refund the value of internal
revenue stamps when they are returned in good condition by the
purchaser, and, in his discretion, redeem or change unused
stamps that have been rendered unfit for use and refund their
value upon proof of destruction. No credit or refund of taxes or
penalties shall be allowed unless the taxpayer files in writing with
the Commissioner a claim for credit or refund within two (2) years
after the payment of the tax or penalty: Provided, however, That a
return filed showing an overpayment shall be considered as a
written claim for credit or refund.
A Tax Credit Certificate validly issued under the provisions of this
Code may be applied against any internal revenue tax, excluding
withholding taxes, for which the taxpayer is directly liable. Any
request for conversion into refund of unutilized tax credits may be
allowed, subject to the provisions of Section 230 of this Code:
Provided, That the original copy of the Tax Credit Certificate
showing a creditable balance is surrendered to the appropriate
revenue officer for verification and cancellation: Provided, further,
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
That in no case shall a tax refund be given resulting from
availment of incentives granted pursuant to special laws for which
no actual payment was made.
The Commissioner shall submit to the Chairmen of the Committee
on Ways and Means of both the Senate and House of
Representatives, every six (6) months, a report on the exercise of
his powers under this Section, stating therein the following facts
and information, among others: names and addresses of
taxpayers whose cases have been the subject of abatement or
compromise; amount involved; amount compromised or abated;
and reasons for the exercise of power: Provided, That the said
report shall be presented to the Oversight Committee in Congress
that shall be constituted to determine that said powers are
reasonably exercised and that the government is not unduly
deprived of revenues.
Now remember that any time during the proceedings or at any
time during the assessment or at any time wherein the
assessment is being protested, whether administratively or
judicially protested, at all this time, the government and the
taxpayer may enter into a compromise. The government, nor the
taxpayer are not precluded from entering or agreeing to enter into
a compromise because of that principle that taxes are the lifeblood
of the government. That as much as possible, the collection will
not be impeded by reason of the protest. So kung magkasundo
ang government and ang taxpapyer, much better, kasi ang gusto
ng government is as much as possible dapat macollect ang tax.
So under Section 204, you have here the authority of the
commissioner to enter into a compromise, abate refund or credit
taxes. For the purposes of compromise, the CIR may compromise
payment of internal revenue taxes, when:
I. There is reasonable doubt as to the validity of the
claim against the taxpayers liability. So there is a
reason to discount or a doubt as to the validity of the
claim, then the taxpayer may offer into a compromise.
II. When the financial position of the taxpayer
demonstrates an inability to pay the assessed
taxes. So the taxpayer, by going through its financial
statements, demonstrates a financial incapacity to pay
the tax, may go to the government and state that he
intends to compromise.
However, under this ground, by going through a compromise on
the ground of financial incapacity, this will require a waiver. When
we go to section 6 of the NIRC letter F, which states the
authority of the CIR to inquire into the bank accounts of the
taxpayer. So, if the ground of the taxpayer in entering into a
compromise is financial incapacity, then the taxpayer is required to
sign a waiver under RA 1405 and under RA 6126, in
which he will allow or give authority to the commissioner to inquire
into his bank deposits or bank accounts, otherwise, if he would
refuse to give that waiver, then the government will not accept or
entertain the application to enter into a compromise.
SEC. 6. Power of the Commissioner to Make assessments
and Prescribe additional Requirements for Tax
Administration and Enforcement.
(F) Authority of the Commissioner to inquire into Bank Deposit
Accounts. - Notwithstanding any contrary provision of Republic Act
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
No. 1405 and other general or special laws, the Commissioner is
hereby authorized to inquire into the bank deposits of:
(1) a decedent to determine his gross estate; and
(2) any taxpayer who has filed an application for compromise of
his tax liability under Sec. 204 (A) (2) of this Code by reason of
financial incapacity to pay his tax liability.
In other words, under Section 6 F, there are only 2 instances,
under the NIRC, wherein the CIR may inquire into the bank
accounts of the taxpayer, because of the Bank Secrecy Law for tax
purposes:
A. For the purpose of Estate Tax. So if the estate of the
taxpayer would consist of bank accounts or bank
deposits, the CIR may inquire into those bank accounts.
B. When the taxpayer files an application for compromise,
under section 204, by reason of financial incapacity.
Under the existing law, the Bank Secrecy Law, we have, as a
general rule, 2 main instances wherein the persons bank accounts
may be inquired into by the government:
A. When the taxpayer gives authority; or
B. When the taxpayer or the person is charged with graft
and corruption, plunder and other similar criminal
offences.
On the other hand, under the 2nd paragraph of 204, we have the
limit on the amount of the compromise:
In cases of Financial Incapacity, the minimum could be
as low as 10% of the tax liability. So waived the yung
other fees and surcharges, forgiven nay un. So it is as
low as 10% of the basic assessed tax, excluding fees,
interest and penalties.
Now for other cases, other than financial incapacity, the
minimum compromise would be up to 40% of the basic
assessed tax.
Now, when the basic assessed tax involve exceeds 1Million, and
the rate offered is less than the prescribed minimum rate. So
example, humirit pa yung taxpayer na below the 10% or 40%
minimum yung hinihingi nya, let us say 5% lang yung kaya nyang
bayaran, the CIR could not decide that on his own. Under this
instance, when the basic tax assessed exceeds 1Million, or when
the settlement offered is less than the prescribed minimum, the
compromise will be subject to the approval of not only the
commissioner, but also subject to the approval of the evaluation
board, which shall be composed of the commissioner and the 4
deputy commissioners. So hindi masolo yan ng CIR, thoses
instances cannot be decided alone by the CIR.
Then we have abatement. Abatement is cancellation. Hindi na lang
sisingilin everything. So there is abatement or cancellation of tax
liability. So in what instances where there is cancellation or
abatement of tax liability?
When the tax or any portion thereof appears to
be unjustly or excessively assessed.
So, when we say there is an assessed taxes, this includes
penalties, interest or surcharges. So abatement covers all these
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
portions. So if the penalty, surcharge or interests are excessive or
unjustly assessed, then it may be abated or cancelled.
When the assessment or administration cost
thereof do not justify the collection of the
amount due.
So when the amount due is lesser than the amount to be
collected, then forget it. In such a case, the government will be
collecting a lesser than the amount it is expected to collect. Lugi
pa ang gobyerno. It will not be pursued anymore.
Next, in what instances where the compromise be made, kasali ba
criminal offences? Now, under the 3rd paragraph of section 204, all
criminal violations may be compromised. That is the rule. So not
only of there is a tax assessment, but also even if there is a
violation of the NIRC, pwede pa rin macompromise, EXCEPT
THOSE ALREADY FILED IN COURT. OR THOSE INVOLVING
FRAUD. However, in actual practice, misking kung nasa court nah
yan or nasa fiscals office pwede pa yan macompromise, because
the government, on the theory that taxes are the lifeblood of the
government, gusto nila masingil ang mga taxes. Also, in your
criminal procedure, meron ding mediation and JDR processes, of
which even if the complainant involved is the state or the
government, it would be a wiser part on the government to go
into a compromise, kaysa sa matagal pa macollecta. So, for text
book purposes, all criminal cases may be compromise, except
THOSE ALREADY FILED IN COURT. OR THOSE INVOLVING
FRAUD, but in actual practice, pwede pa din yan macompromise.
Now, letter C of Section 204, when refunds, or tax credits may be
granted? These are taxes erroneously or illegally collected or
penalties imposed without authority. So refunds, the taxes may be
returned, granted in favour of the taxpayers. Now in the context of
the refund, the claim for the refund, or those erroneously or
illegally collected taxes, we have Section 229 and section 204 (C).
These are the provisions governing refunds. In Section 229, this
involves refunds fro taxes erroneously or illegally collected.
SEC. 229. Recovery of Tax Erroneously or Illegally
Collected. - no suit or proceeding shall be maintained in any
court for the recovery of any national internal revenue tax
hereafter alleged to have been erroneously or illegally assessed or
collected, or of any penalty claimed to have been collected without
authority, of any sum alleged to have been excessively or in any
manner wrongfully collected without authority, or of any sum
alleged to have been excessively or in any manner wrongfully
collected, until a claim for refund or credit has been duly filed with
the Commissioner; but such suit or proceeding may be
maintained, whether or not such tax, penalty, or sum has been
paid under protest or duress.
In any case, no such suit or proceeding shall be filed after the
expiration of two (2) years from the date of payment of the tax or
penalty regardless of any supervening cause that may arise after
payment: Provided, however, That the Commissioner may, even
without a written claim therefor, refund or credit any tax, where
on the face of the return upon which payment was made, such
payment appears clearly to have been erroneously paid.
Now, do not confuse yourself of the procedure for the collection of
refunds under section 229 with that, under section 112, in which,
that section 112 has its own nature, grounds, and requirements
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
for the collection of the refund. The claims for refund, outside
section 112, will be governed by section 229.
SEC. 112. Refunds or Tax Credits of Input Tax. -
(A) Zero-rated or Effectively Zero-rated Sales. - any VAT-
registered person, whose sales are zero-rated or effectively zero-
rated may, within two (2) years after the close of the taxable
quarter when the sales were made, apply for the issuance of a tax
credit certificate or refund of creditable input tax due or paid
attributable to such sales, except transitional input tax, to the
extent that such input tax has not been applied against output tax:
Provided, however, That in the case of zero-rated sales under
Section 106(A)(2)(a)(1), (2) and (B) and Section 108 (B)(1) and
(2), the acceptable foreign currency exchange proceeds thereof
had been duly accounted for in accordance with the rules and
regulations of the Bangko Sentral ng Pilipinas (BSP): Provided,
further, That where the taxpayer is engaged in zero-rated or
effectively zero-rated sale and also in taxable or exempt sale of
goods of properties or services, and the amount of creditable input
tax due or paid cannot be directly and entirely attributed to any
one of the transactions, it shall be allocated proportionately on the
basis of the volume of sales.
So if you file a claim for refund, because you are a zero rated
taxpayer, wala ikaw output VAT, what you have are all input vat,
so you end up with excess input vat. So under section 112, you file
for a claim of refund. And there is that period, if the period lapses,
the taxpayer will bring it now to the CTA, and then you pursue
your remedies. NOW SECTION 112 WILL NOT COVER THOSE
erroneously or illegally collected VAT because, under zero
rated transactions, there is no erroneously or illegally collected
taxes. Ikaw pa ngah palagi may execess eh. So the Vat taxpayer,
for that purposes, there is no erroneously or illegally collected vat.
If it is an erroneously or illegally collected VAT then you are a 12%
VAT taxpayer, hindi ikaw zero rated, kasi nagbayad ka ng
erroneously or illegally collected VAT, the procedure is not 112,
the procedure is under Section 229. So for all internal revenue
taxes which shall be erroneously or illegally collected, it will be
governed by the procedure under section 229.
Now the claim for refund, is to be filed within 2 years from
payment. It shall be filed with the CIR. In paragraph C of section
229, credit or refund taxes erroneously or illegally collected or
penalties imposed without authority, you have there the
procedure. So the claim for refund does not only involved the
claim for taxes, it also covers penalties, fees, interest and taxes. In
other words, we you file a claim for refund, there is no need of a
protest. Meaning, at the time of claiming the refund, there is no
need to pay under protest, because it is only later that you will
discover that you have paid an erroneously or illegally collected
taxes. Hindi mo man malaman at the time of your payment that
you had paid an erroneously or illegally collected taxes, so you are
not required therefore to pay under protest. So protest is not
necessary in claiming for a refund or tax credit, unlike when we go
to real property taxation later, like when you dis-agree with the
computation of the local treasurer on your real property tax, and
you like to preotest the computation of the treasurer, you could
not protest unless you pay first. So you are required to pay under
protest. This requirement is not required under the NIRC.
Now, can you pay, and at the same time protest,? YES, because
these are 2 separate remedies. Like when you receive a notice of
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
assessment, and because you are afraid na hahabolin ka,
binayaran mo nalang ang tax assessed under protest, at the same
time you pursue your protest, that is still allowed. Hindi ibig
sabihin na kung nagbayad ka nah, eh you have abandoned your
protest. The protest would still continue despite the protest.
Now, what is crucial in the claim of refund is the filing of the claim.
Now, the claim for refund goes to TWO (2) stages.
1. Administrative Claim
2. Judicial Claim
Judicial Claim, when you go to court. The Administrative Claim is
lodge with the CIR, then it is converted into a judicial claim when
you file a case with the CTA. Now the law requires, under section
229 the both the administrative claim and the judicial claim should
be within 2 years from payment. Now, under section 229, wala
naming period for the commissioner, within which to decide. So,
what happens now, if 2 years nah, hindi pa rin nagdecide ang
commissioner. Then waht will happen to your claim, eh hinintay
mo yung decision ng CIR, nag lapsed na yung 2 years lumabas
ang decision denying your claim, then you have no remedy to
brought it up for a judicial claim with the CTA. Because the law
requires that both the administrative and the judicial claim must
be brought within 2 years. In other words, during the 2 year
period within which the administrative claim should be and the 2
year period is about to set in, huwag mo nah hintayin ang 2 year
period na mag-expire. Within reasonable time, then you do not
wait for the decision of the CIR, file directly your judicial claim with
the CTA.
Now under RA 9282, the CTA has exclusive appellate jurisdiction
on inactions of the CIR, so you can bring that up to the CTA
because that would be treated as an in action by the CIR
appealable to the CTA. Otherwise paso na yan, and wala ka na
remedy. Pag-inakyat mo yan sa CTA and lapsed na yung 2 year
period, sasabihin ng BIR na prescribed na yan. Now, how is that
justified? Reading section 229, under the second paragraph. So
you file a petition to the CTA for Review by reason of the inaction
and denial of the CIR.
Now, yung counting is from payment. This is the counting for
refund. Sa protest, the counting will start after the last day
prescribed by law to file the returns. Dito naman sa refund, the
counting is from the date of actual payment or from the date of
actual filing of the return, because usually you pay the tax at the
time you filed your return. So for purposes of the refund, the
counting of the 2 year period will be from the date of actual
payment or from the date of actual filing of the return.
So the deadline for the filing of the return is April 15, but you filed
your return on April 1 and you paid the tax on April 1 and you
immediately noticed na merong erroneous or illegally collected
taxes, when will your counting begin? So you counting will begin
on April 2, after the date of payment, for the purpose of
computing the 2 year period.
But, remember in protest iba ang counting ng prescriptive period.
It is not counted on the day you filed you return, it is counted
after the last day prescribed by law to file the returns. Meaning
after the deadline. So take note of those variations of the period.
Ano yung bilangan ng mga periods.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So the proceedings will be go to the CTA, for judicial claim, via
division, and then go to the CTA en banc. Then the Supreme
Court. So ang importante is if you bring it to the CTA, dapat within
pa sa 2 year period from payment of the taxes, to claim for the
refund.
The next remedy, other remedies is under section 282, on
informers reward. That is another remedy for the government to
collect the taxes. Now there is an informers reward given by the
government, whether you are private or government. However
there is also an informers reward wherein BIR personnel are not
allowed to claim. So under Section 282, you have this 2 kinds of
informers reward.
SEC. 282. Informer's Reward to Persons Instrumental in
the Discovery of Violations of the National Internal
Revenue Code and in the Discovery and Seizure of
Smuggled Goods. -
(A) For Violations of the National Internal Revenue
Code. Any person, except an internal revenue official or
employee, or other public official or employee, or his relative
within the sixth degree of consanguinity, who voluntarily gives
definite and sworn information, not yet in the possession of the
Bureau of Internal Revenue, leading to the discovery of frauds
upon the internal revenue laws or violations of any of the
provisions thereof, thereby resulting in the recovery of revenues,
surcharges and fees and/or the conviction of the guilty party
and/or the imposition of any of the fine or penalty, shall be
rewarded in a sum equivalent to ten percent (10%) of the
revenues, surcharges or fees recovered and/or fine or penalty
imposed and collected or One Million Pesos (P1,000,000) per case,
whichever is lower. The same amount of reward shall also be
given to an informer where the offender has offered to
compromise the violation of law committed by him and his offer
has been accepted by the Commissioner and collected from the
offender: Provided, That should no revenue, surcharges or fees be
actually recovered or collected, such person shall not be entitled to
a reward: Provided, further, That the information mentioned
herein shall not refer to a case already pending or previously
investigated or examined by the Commissioner or any of his
deputies, agents or examiners, or the Secretary of Finance or any
of his deputies or agents: Provided, finally, That the reward
provided herein shall be paid under rules and regulations issued by
the Secretary of Finance, upon recommendation of the
Commissioner.
(B) For Discovery and Seizure of Smuggled Goods.To
encourage the public to extend full cooperation in eradicating
smuggling, a cash reward equivalent to ten percent (10%) of the
fair market value of the smuggled and confiscated goods or One
Million Pesos (P1,000,000) per case, whichever is lower, shall be
given to persons instrumental in the discovery and seizure of such
smuggled goods.
The cash rewards of informers shall be subject to income tax,
collected as a final withholding tax, at a rate of ten percent (10%).
The Provisions of the foregoing Subsections notwithstanding, all
public officials, whether incumbent or retired, who acquired the
information in the course of the performance of their duties during
their incumbency, are prohibited from claiming informer's reward.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
So the information provided by the informer, must be a sworn
information, meaning under oath and such information is not yet
known or not yet in the possession of the BIR. Moreover, with this
information the BIR was able to discover fraud and was able to
collect the taxes, that resulted in the collection of revenues,
surcharges and fees, and/or the conviction of the guilty party, or
the imposition of any fines or penalties. So, having this completed,
the reward, in the sum equivalent to 10% of the amount collected
or 1 million, ang problema, whichever is less. Hindi whichever is
higher, it is whichever is lower, that would be your informers
reward. So excluded ditto yung mga taga-gobyerno.
Now, what if walang nakuha? Walang nakuha ang gobyerno, well
wala din makuha ang informer. Malasya. Provided further that, if
may case nah already pending in court, hindi na din makakuha
ang informer, since the requirement of the law is that then
information must not yet known or not yet in the possession of the
BIR.
Now, in paragraph B, lahat na pwede, whether private or
government pwede na maka-collect, this is in the case of seizure
of smuggled goods. Because in the case of smuggled goods, aside
from the violation og the tariff and customs code, there is also the
collection of internal revenue taxes. Since, when you import, there
is VAT, specific ad valorem or other taxes. So in the discovery of
these smuggled goods, it will cover everybody. Lahat entitled to
the informers reward. Pero, whichever is lower pa rin. Kahit taga-
gobyerno ka, pwede ka makakuha ng informers reward. 10% of
the fair market value of the good seized or 1million, whichever is
lower, problema pa ditto, kailangan ka magbayad ng withholding
tax. May withholding tax pa na 10%, so 90% na alng mapunta sa
taxpayer.
Another remedy, you have section 5 of the NIRC, wherein, the
CIR has the power to obtain information, issue summons and etc.
SEC. 5. Power of the Commissioner to Obtain Information,
and to Summon, Examine, and Take Testimony of
Persons. - In ascertaining the correctness of any return, or in
making a return when none has been made, or in determining the
liability of any person for any internal revenue tax, or in collecting
any such liability, or in evaluating tax compliance, the
Commissioner is authorized:
(A) To examine any book, paper, record, or other data which may
be relevant or material to such inquiry;
(B) To Obtain on a regular basis from any person other than the
person whose internal revenue tax liability is subject to audit or
investigation, or from any office or officer of the national and local
governments, government agencies and instrumentalities,
including the Bangko Sentral ng Pilipinas and government-owned
or -controlled corporations, any information such as, but not
limited to, costs and volume of production, receipts or sales and
gross incomes of taxpayers, and the names, addresses, and
financial statements of corporations, mutual fund companies,
insurance companies, regional operating headquarters of
multinational companies, joint accounts, associations, joint
ventures of consortia and registered partnerships, and their
members;
(C) To summon the person liable for tax or required to file a
return, or any officer or employee of such person, or any person
having possession, custody, or care of the books of accounts and
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
other accounting records containing entries relating to the
business of the person liable for tax, or any other person, to
appear before the Commissioner or his duly authorized
representative at a time and place specified in the summons and
to produce such books, papers, records, or other data, and to give
testimony;
(D) To take such testimony of the person concerned, under oath,
as may be relevant or material to such inquiry; and
(E) To cause revenue officers and employees to make a canvass
from time to time of any revenue district or region and inquire
after and concerning all persons therein who may be liable to pay
any internal revenue tax, and all persons owning or having the
care, management or possession of any object with respect to
which a tax is imposed.
The provisions of the foregoing paragraphs notwithstanding,
nothing in this Section shall be construed as granting the
Commissioner the authority to inquire into bank deposits other
than as provided for in Section 6(F) of this Code.
We have also section 6, the power of the CIR to make
assessments.
You also this amendment of section 6 (F) number 3, under RR
10021, otherwise known as exchange of information on tax
matters of 2009. Wherein the CIR may ask information on foreign
government. The CIR may request information to foreign tax
authorities or agency, subject to confidentiality requirements.
The next is under section 15, the making of arrest, search and
seizure. This requires the CIR to secure a search warrant, except
under the plain view doctrine, wherein you can make a
warrantless arrest.
SEC. 15. Authority of Internal Revenue Officers to Make
Arrests and Seizures. - The Commissioner, the Deputy
Commissioners, the Revenue Regional Directors, the Revenue
District Officers and other internal revenue officers shall have
authority to make arrests and seizures for the violation of any
penal law, rule or regulation administered by the Bureau of
Internal Revenue. Any person so arrested shall be forthwith
brought before a court, there to be dealt with according to law.
Now, the other part of the remedy, you have this judicial remedy.
You have this Civil Action and the Criminal Action.
In a Civil Action, this is a collection case for collection of sum of
money. It will be filed with the regular courts, on the basis of the
jurisdictional amount, either on the RTC or MTC, depending on the
amount. When the BIR finalized the assessment and determine the
tax deficiency, collection will now follow. The BIR may either go
through Administrative Remedies or Judicial Remedies, for
collection of sum of money. But, when the amount of the taxes
and fees amounts to 1million or more, the case should be filed
original and exclusive jurisdiction is with the CTA, under RA 9282.
So you bring that up to the CTA. The CTA has 2 main jurisdictions:
Exclusive Appellate Jurisdiction on cases decided by the
CIR or the Bureau of Customs, from an administrative
remedy, converted into a judicial action.
Original and Exclusive Jurisdiction for tax collection
cases, where the amount involved is 1million or more,
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
including criminal actions from violation of the NIRC. In
the criminal action, you have sections 281.
Now, when you bring an action to collection the taxes by civil
action or administrative remedy, remember that it will require a
prior assessment. You cannot collect taxes without prior
assessment. However, when you pursue a criminal action, you do
not need a prior assessment. The eventual violation of such
offences of the NIRC will give rise to the filing of such action and
under section 205, remember that when you pursue the criminal
action, it will also include the payment of the tax liability. But it will
not require any assessment.
SEC. 205. Remedies for the Collection of Delinquent
Taxes. - The civil remedies for the collection of internal revenue
taxes, fees or charges, and any increment thereto resulting from
delinquency shall be:
(a) By distraint of goods, chattels, or effects, and other personal
property of whatever character, including stocks and other
securities, debts, credits, bank accounts and interest in and rights
to personal property, and by levy upon real property and interest
in rights to real property; and
(b) By civil or criminal action.
Either of these remedies or both simultaneously may be pursued in
the discretion of the authorities charged with the collection of such
taxes: Provided, however, That the remedies of distraint and levy
shall not be availed of where the amount of tax involve is not
more than One hundred pesos (P100).
The judgment in the criminal case shall not only impose the
penalty but shall also order payment of the taxes subject of the
criminal case as finally decided by the Commissioner.
The Bureau of Internal Revenue shall advance the amounts
needed to defray costs of collection by means of civil or criminal
action, including the preservation or transportation of personal
property distrained and the advertisement and sale thereof, as
well as of real property and improvements thereon.
The prescriptive period to file a criminal case is 5 years, that also
coincide with the period of collection of taxes. The period of
prescription will begin to run, under section 281, from the day of
the commission of the violation, and if not known, from the day of
discovery. It will be filed with the prosecutors office, with the DOJ,
then it will be filed in court, either the RTC or the MTC, depending
on the jurisdictional amount.
Now, if the amount of taxes and fees involved in the criminal
action, is 1million or more, the criminal action is filed in the CTA. It
is the same with the civil action. It is with the CTA.
Now, inn the criminal action, you have the provisions of title 10,
statutory provisions and penalties, you have also crime and other
offenses. For the different violations, and crimes and other
offenses and forfeitures, you have the provisions under title 10.
Now you have section 247, theses are what you call civil
remedies, because when there is a finding of a deficiency or there
is late payment of the taxes, there will be surcharges that will be
added on top of the basic tax. What are these add-ons or
additions on the deficiency tax?
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
SEC. 247. General Provisions. - (a) The additions to the tax or
deficiency tax prescribed in this Chapter shall apply to all taxes,
fees and charges imposed in this Code. The Amount so added to
the tax shall be collected at the same time, in the same manner
and as part of the tax.
(b) If the withholding agent is the Government or any of its
agencies, political subdivisions or instrumentalities, or a
government-owned or controlled corporation, the employee
thereof responsible for the withholding and remittance of the tax
shall be personally liable for the additions to the tax prescribed
herein.
(c) the term 'person', as used in this Chapter, includes an officer
or employee of a corporation who as such officer, employee or
member is under a duty to perform the act in respect of which the
violation occurs.
We also have Section 248
SEC. 248. - Civil Penalties. - (A) There shall be imposed, in
addition to the tax required to be paid, a penalty equivalent to
twenty-five percent (25%) of the amount due, in the following
cases:
(1) Failure to file any return and pay the tax due thereon as
required under the provisions of this Code or rules and regulations
on the date prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a
return with an internal revenue officer other than those with whom
the return is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for
its payment in the notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on
any return required to be filed under the provisions of this Code or
rules and regulations, or the full amount of tax due for which no
return is required to be filed, on or before the date prescribed for
its payment.
(B) In case of willful neglect to file the return within the period
prescribed by this Code or by rules and regulations, or in case a
false or fraudulent return is willfully made, the penalty to be
imposed shall be fifty percent (50%) of the tax or of the deficiency
tax, in case, any payment has been made on the basis of such
return before the discovery of the falsity or fraud: Provided, That a
substantial underdeclaration of taxable sales, receipts or income,
or a substantial overstatement of deductions, as determined by
the Commissioner pursuant to the rules and regulations to be
promulgated by the Secretary of Finance, shall constitute prima
facie evidence of a false or fraudulent return: Provided, further,
That failure to report sales, receipts or income in an amount
exceeding thirty percent (30%) of that declared per return, and a
claim of deductions in an amount exceeding (30%) of actual
deductions, shall render the taxpayer liable for substantial
underdeclaration of sales, receipts or income or for overstatement
of deductions, as mentioned herein.
Another add-on is section 249
SEC. 249. Interest. - (A) In General. - There shall be assessed
and collected on any unpaid amount of tax, interest at the rate of
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
twenty percent (20%) per annum, or such higher rate as may be
prescribed by rules and regulations, from the date prescribed for
payment until the amount is fully paid.
(B) Deficiency Interest. - Any deficiency in the tax due, as the
term is defined in this Code, shall be subject to the interest
prescribed in Subsection (A) hereof, which interest shall be
assessed and collected from the date prescribed for its payment
until the full payment thereof.
(C) Delinquency Interest. - In case of failure to pay:
(1) The amount of the tax due on any return to be filed, or
(2) The amount of the tax due for which no return is required, or
(3) A deficiency tax, or any surcharge or interest thereon on the
due date appearing in the notice and demand of the
Commissioner, there shall be assessed and collected on the unpaid
amount, interest at the rate prescribed in Subsection (A) hereof
until the amount is fully paid, which interest shall form part of the
tax.
(D) Interest on Extended Payment. - If any person required to pay
the tax is qualified and elects to pay the tax on installment under
the provisions of this Code, but fails to pay the tax or any
installment hereof, or any part of such amount or installment on or
before the date prescribed for its payment, or where the
Commissioner has authorized an extension of time within which to
pay a tax or a deficiency tax or any part thereof, there shall be
assessed and collected interest at the rate hereinabove prescribed
on the tax or deficiency tax or any part thereof unpaid from the
date of notice and demand until it is paid.
The next is title 9 compliance requirements
Section 232 the basic book of accounts, which is the journals
and ledgers. Also the requirement of audit by a CPA
SEC. 232. Keeping of Books of Accounts. - (A)
Corporations, Companies, Partnerships or Persons
Required to Keep Books of Accounts. - All corporations,
companies, partnerships or persons required by law to pay internal
revenue taxes shall keep a journal and a ledger or their
equivalents: Provided, however, That those whose quarterly sales,
earnings, receipts, or output do not exceed Fifty thousand pesos
(P50,000) shall keep and use simplified set of bookkeeping records
duly authorized by the Secretary of Finance where in all
transactions and results of operations are shown and from which
all taxes due the Government may readily and accurately be
ascertained and determined any time of the year: Provided,
further, That corporations, companies, partnerships or persons
whose gross quarterly sales, earnings, receipts or output exceed
One hundred fifty thousand pesos (P150,000) shall have their
books of accounts audited and examined yearly by independent
Certified Public Accountants and their income tax returns
accompanied with a duly accomplished Account Information Form
(AIF) which shall contain, among others, information lifted from
certified balance sheets, profit and loss statements, schedules
listing income-producing properties and the corresponding income
therefrom and other relevant statements.
(B) Independent Certified Public Accountant Defined. - The
term 'Independent Certified Public Accountant', as used in the
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
preceding paragraph, means an accountant who possesses the
independence as defined in the rules and regulations of the Board
of Accountancy promulgated pursuant to Presidential Decree No.
692, otherwise known as the Revised Accountancy Law.
Section 233 We have subsidiary books
SEC. 233. Subsidiary Books. - All corporations, companies,
partnerships or persons keeping the books of accounts mentioned
in the preceding Section may, at their option, keep subsidiary
books as the needs of their business may require: Provided, That
were such subsidiaries are kept, they shall form part of the
accounting system of the taxpayer and shall be subject to the
same rules and regulations as to their keeping, translation,
production and inspection as are applicable to the journal and the
ledger.
Section 234 Language of the books of account, native
language, English or Spanish.
SEC. 234. Language in which Books are to be Kept;
Translation. - All suchcorporations, companies, partnerships or
persons shall keep the books or records mentioned in Section 232
hereof in native language, English or Spanish: Provided, however,
That if in addition to said books or records the taxpayer keeps
other books or records in a language other than a native
language, English or Spanish, he shall make a true and complete
translation of all the entries in suck other books or records into a
native language; English or Spanish, and the said translation must
be made by the bookkeeper, or such taxpayer, or in his absence,
by his manager and must be certified under oath as to its
correctness by the said bookkeeper or manager, and shall form an
integral part of the aforesaid books of accounts. The keeping of
such books or records in any language other than a native
language, English or Spanish, is hereby prohibited.
Section 235 how long will you preserved your books and other
accounting records period is 3 years. The assessment must only
be made, once in a tax year, otherwise it is a form of harassment.
That is the reason why in the LOA, it is a requirement that the
period of examination must be stated. It must also be for one
taxable period.
SEC. 235. Preservation of Books and Accounts and Other
Accounting Records. - All the books of accounts, including the
subsidiary books and other accounting records of corporations,
partnerships, or persons, shall be preserved by them for a period
beginning from the last entry in each book until the last day
prescribed by Section 203 within which the Commissioner is
authorized to make an assessment. The said books and records
shall be subject to examination and inspection by internal revenue
officers: Provided, That for income tax purposes, such examination
and inspection shall be made only once in a taxable year, except in
the following cases:
(a) Fraud, irregularity or mistakes, as determined by the
Commissioner;
(b) The taxpayer requests reinvestigation;
(c) Verification of compliance with withholding tax laws and
regulations;
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(d) Verification of capital gains tax liabilities; and
(e) In the exercise of the Commissioner's power under Section
5(B) to obtain information from other persons in which case,
another or separate examination and inspection may be made.
Examination and inspection of books of accounts and other
accounting records shall be done in the taxpayer's office or place
of business or in the office of the Bureau of Internal Revenue. All
corporations, partnerships or persons that retire from business
shall, within ten (10) days from the date of retirement or within
such period of time as may be allowed by the Commissioner in
special cases, submit their books of accounts, including the
subsidiary books and other accounting records to the
Commissioner or any of his deputies for examination, after which
they shall be returned. Corporations and partnerships
contemplating dissolution must notify the Commissioner and shall
not be dissolved until cleared of any tax liability.
Any provision of existing general or special law to the contrary
notwithstanding, the books of accounts and other pertinent
records of tax-exempt organizations or grantees of tax incentives
shall be subject to examination by the Bureau of Internal Revenue
for purposes of ascertaining compliance with the conditions under
which they have been granted tax exemptions or tax incentives,
and their tax liability, if any.
Section 236 we have administrative provisions. Registration
requirements and TIN numbers.
SEC. 236. Registration Requirements. - (A)
Requirements. - Every person subject to any internal revenue
tax shall register once with the appropriate Revenue District
Officer:
(1) Within ten (10) days from date of employment, or
(2) On or before the commencement of business,or
(3) Before payment of any tax due, or
(4) Upon filing of a return, statement or declaration as required in
this Code.
The registration shall contain the taxpayer's name, style, place of
residence, business and such other information as may be
required by the Commissioner in the form prescribed therefor.
A person maintaining a head office, branch or facility shall register
with the Revenue District Officer having jurisdiction over the head
office, brand or facility. For purposes of this Section, the term
'facility' may include but not be limited to sales outlets, places of
production, warehouses or storage places.
(B) Annual Registration Fee - An annual registration fee in the
amount of Five hundred pesos (P500) for every separate or
distinct establishment or place of business, including facility types
where sales transactions occur, shall be paid upon registration and
every year thereafter on or before the last day of January:
Provided, however, That cooperatives, individuals earning purely
compensation income, whether locally or abroad, and overseas
workers are not liable to the registration fee herein imposed.
The registration fee shall be paid to an authorized agent bank
located within the revenue district, or to the Revenue Collection
Page 32
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Officer, or duly authorized Treasurer of the city of municipality
where each place of business or branch is registered.
(C) Registration of Each Type of Internal Revenue Tax. -
Every person who is required to register with the Bureau of
Internal Revenue under Subsection (A) hereof, shall register each
type of internal revenue tax for which he is obligated, shall file a
return and shall pay such taxes, and shall updates such
registration of any changes in accordance with Subsection (E)
hereof.
(D) Transfer of Registration. - In case a registered person
decides to transfer his place of business or his head office or
branches, it shall be his duty to update his registration status by
filing an application for registration information update in the form
prescribed therefor.
(E) Other Updates. - Any person registered in accordance with
this Section shall, whenever applicable, update his registration
information with the Revenue District Office where he is
registered, specifying therein any change in type and other
taxpayer details.
(F) Cancellation of Registration. - The registration of any
person who ceases to be liable to a tax type shall be cancelled
upon filing with the Revenue District Office where he is registered
an application for registration information update in a form
prescribed therefor.
(G) Persons Commencing Business. - Any person, who
expects to realize gross sales or receipts subject to value-added
tax in excess of the amount prescribed under Section 109(z) of
this Code for the next 12-month period from the commencement
of the business, shall register with the Revenue District Office
which has jurisdiction over the head office or branch and shall pay
the annual registration fee prescribed in Subsection (B) hereof.
(H) Persons Becoming Liable to the Value-added Tax. - Any
person, whose gross sales or receipts in any 12-month period
exceeds the amount prescribed under Subsection 109(z) of this
Code for exemption from the value-added tax shall register in
accordance with Subsection (A) hereof, and shall pay the annual
registration fee prescribed within ten (10) days after the end of
the last month of that period, and shall be liable to the value-
added tax commencing from the first day of the month following
his registration.
(I) Optional Registration of Exempt Person. - Any person
whose transactions are exempt from value-added tax under
Section 109(z) of this Code; or any person whose transactions are
exempt from the value-added tax under Section 109(a), (b), (c),
and (d) of this Code, who opts to register as a VAT taxpayer with
respect to his export sales only, may update his registration
information in accordance with Subsection (E) hereof, not later
than ten (10) days before the beginning of the taxable quarter and
shall pay the annual registration fee prescribed in Subsection (B)
hereof.
In any case, the Commissioner may, for administrative reasons,
deny any application for registration including updates prescribed
under Subsection (E) hereof.
For purposes of Title IV of this Code, any person who has
registered value-added tax as a tax type in accordance with the
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
provisions of Subsection (C) hereof shall be referred to as VAT-
registered person who shall be assigned only one Taxpayer
Identification Number.
(J) Supplying of Taxpayer Identification Number (TIN). -
Any person required under the authority of this Code to make,
render or file a return, statement or other document shall be
supplied with or assigned a Taxpayer Identification Number (TIN)
which he shall indicate in such return, statement or document filed
with the Bureau of Internal Revenue for his proper identification
for tax purposes, and which he shall indicate in certain documents,
such as, but not limited to the following:
(1) Sugar quedans, refined sugar release order or similar
instruments;
(2) Domestic bills of lading;
(3) Documents to be registered with the Register of Deeds of
Assessor's Office;
(4) Registration certificate of transportation equipment by land,
sea or air;
(5) Documents to be registered with the Securities and Exchange
Commission;
(6) Building construction permits;
(7) Application for loan with banks, financial institutions, or other
financial intermediaries;
(8) Application for mayor's permit;
(9) Application for business license with the Department of Trade
& Industry; and
(10) Such other documents which may hereafter be required
under rules and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commissioner.
In cases where a registered taxpayer dies, the administrator or
executor shall register the estate of the decedent in accordance
with Subsection (A) hereof and a new Taxpayer Identification
Number (TIN) shall be supplied in accordance with the provisions
of this Section.
In the case of a nonresident decedent, the executor or
administrator of the estate shall register the estate with the
Revenue District Office where he is registered: Provided, however,
That in case such executor or administrator is not registered,
registration of the estate shall be made with the Taxpayer
Identification Number (TIN) supplied by the Revenue District
Office having jurisdiction over his legal residence.
Only one Taxpayer identification Number (TIN) shall be assigned
to a taxpayer. Any person who shall secure more than one
Taxpayer Identification Number shall be criminally liable under the
provision of Section 275 on 'Violation of Other Provisions of this
Code or Regulations in General'.
January 20, 2015
You have section 236 on the registration requirements:
Page 33
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
SEC. 236. Registration Requirements. -
(A) Requirements. - Every person subject to any internal revenue
tax shall register once with the appropriate Revenue District
Officer:
(1) Within ten (10) days from date of employment, or
(2) On or before the commencement of business,or
(3) Before payment of any tax due, or
(4) Upon filing of a return, statement or declaration as required in
this Code.
So for tax purposes on the national level, you have the
commissioner. Below the office of the commissioner, you have the
different offices of the BIR. And below the national set-up, you
have the different regional offices of the BIR. So these will
constitute the regional set-up of the BIR. But it will have its own
collection and assessment office(?), so ito yung mga RO or
regional office ng BIR. This is to understand how the BIR works.
Below thee regional offices are the different RDOs. So like the
Davao region, our regional office is composed different RDOS, in
Davao we have East and West, and the other RDO offices, del
Norte, del Sur, etc. So the registration is done before the RDO to
where the taxpayer is residing or the principal office of the
taxpayer is located.
Or if you are for the first time, after graduating, you have a job,
your ER will require you to secure or he will be the one in your
behalf to secure TIN No. So there is a form there to be filled up by
the EE, by reason of the employment, you have to secure your
TIN No. because your ER will make the corresponding withholding
on your salaries and wages. So when remittances are made of the
withholding tax on the salaries and wages, the TIN No. of the EE
and the ER are disclosed through the submission in the course of
the remittances. Or if you want to start a business, you have to
secure a TIN No. Or in all returns that you will file estate, donors
tax, the business taxes (VAT, OPT, Excise, DST) all these returns
require the disclose of the TIN of the taxpayer because that
number is the identification or serial number of the taxpayer aside
from the name of the taxpayer.
The registration shall contain the taxpayer's name, style, place of
residence, business and such other information as may be
required by the Commissioner in the form prescribed therefor.
A person maintaining a head office, branch or facility shall register
with the Revenue District Officer having jurisdiction over the head
office, brand or facility. For purposes of this Section, the term
'facility' may include but not be limited to sales outlets, places of
production, warehouses or storage places.
Now in the par. B the requirement of payment of the annual
registration fee of 500.
(B) Annual Registration Fee - An annual registration fee in the
amount of Five hundred pesos (P500) for every separate or
distinct establishment or place of business, including facility types
where sales transactions occur, shall be paid upon registration and
every year thereafter on or before the last day of January:
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Provided, however, That cooperatives, individuals earning purely
compensation income, whether locally or abroad, and overseas
workers are not liable to the registration fee herein imposed.
The registration fee shall be paid to an authorized agent bank
located within the revenue district, or to the Revenue Collection
Officer, or duly authorized Treasurer of the city of municipality
where each place of business or branch is registered.
So kung marami kang establishment or branches or places of
businesses and each separate establishment of business will have
its corresponding annual registration payment of that registration
fee. Deadline is until the last day of January, every year.
*the following were only either read by Dean, or translated to its
Visayan translation. Haha! So read nalang. *
(C) Registration of Each Type of Internal Revenue Tax. - Every
person who is required to register with the Bureau of Internal
Revenue under Subsection (A) hereof, shall register each type of
internal revenue tax for which he is obligated, shall file a return
and shall pay such taxes, and shall updates such registration of
any changes in accordance with Subsection (E) hereof.
(D) Transfer of Registration. - In case a registered person decides
to transfer his place of business or his head office or branches, it
shall be his duty to update his registration status by filing an
application for registration information update in the form
prescribed therefor.
(E) Other Updates. - Any person registered in accordance with this
Section shall, whenever applicable, update his registration
information with the Revenue District Office where he is
registered, specifying therein any change in type and other
taxpayer details.
(F) Cancellation of Registration. - "(1) General Rule. - The
registration of any person who ceases to be liable to a tax type
shall be cancelled upon filing with the Revenue District Office
where he is registered, an application for registration information
update in a form prescribed therefor;
"(2) Cancellation of Value-Added Tax Registration. - A VAT-
registered person may cancel his registration for VAT if:
"(a) He makes written application and can demonstrate to the
Commissioner's satisfaction that his gross sales or receipts for the
following twelve (12) months, other than those that are exempt
under Section 109 (A) TO (U), will not exceed One million five
hundred thousand pesos (P1,500,000); or
"(b) He has ceased to carry on his trade or business, and does not
expect to recommence any trade or business within the next
twelve (12) months.
"The cancellation of registration will be effective from the first day
of the following month. [amended by RA 9337]
So if you would cease in your registration, that would be
equivalent to the cessation of your business operation because if
you cannot inform the BIR that you are closing down, then the BIR
will presume that you are continuing business. Then they will
notice na hindi ka na nagfifile ng income tax return or VAT
percentage tax returns, so they will make an assessment to notify
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
or even file a criminal case to demand submission. And your
defense is nagsirado na ako, matagal na, but you didnt comply
with the cancellation requirement. So you must inform the BIR
that you will not continue your business.
Then for VAT purposes
"(G) Persons Required to Register for Value-added Tax. -
"(1) Any person who, in the course of trade or business, sells,
barters or exchanges goods or properties, or engages in the sale
or exchange of services, shall be liable to register for Value-added
tax if:
"(a) His gross sales or receipts for the past twelve (12) months,
other than those that are exempt under section 109 (a) to (u),
have exceeded One million five hundred thousand pesos
(P1,500,000); or
"(b) There are reasonable grounds to believe that his gross sales
or receipts for the next twelve (12) months, other than those that
are exempt under Section 109 (A) to (U), will exceed one million
five hundred thousand pesos (P1,500,000).
"(2) Every person who becomes liable to be registered under
paragraph (1) of this Subsection shall register with the Revenue
District Office which has jurisdiction over the head office or branch
of that person, and shall pay the annual registration fee prescribed
in Subsection (B) hereof. If he fails to register, he shall be liable to
pay the tax under Title IV as if he were a VAT-registered person,
but without the benefit of input tax credits for the period in which
he was not properly registered. [amended, 9337]
The registration includes those VAT and non-VAT persons.
"(H) Optional Registration for Value-added Tax of Exempt Person.
- (1) Any person who is not required to register for Value-added
tax under Subsection (G) hereof may elect to register for Value-
added tax by registering with the Revenue District Office that has
jurisdiction over the head office of that person, and paying the
annual registration fee in Subsection (B) hereof.
(2) Any person who elects to register under this Subsection shall
not be entitled to cancel his registration under Subsection (F)(2)
for the next three (3) years.
"For purposes of Title IV of this Code, any person who has
registered value-added tax as a tax type in accordance with the
provisions of Subsection (C) hereof shall be referred to as a "VAT-
registered person" who shall be assigned only one Taxpayer
Identification Number (TIN).
"(I) Supplying of Taxpayer Identification Number (TIN). - Any
person required under the authority of this Code to make, render
or file a return, statement or other document shall be supplied
with or assigned a Taxpayer Identification Number (TIN) which he
shall indicate in such return, statement or document filed with the
Bureau of Internal Revenue for his proper identification for tax
purposes, and which he shall indicate in certain documents, such
as, but not limited to, the following:
"(1) Sugar quedans, refined sugac release order or similar
instruments;
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
"(2) Domestic bills of lading;
"(3) Documents to be registered with the Register of Deeds or
Assessor's Office;
"(4) Registration certificate of transportation equipment by land,
sea or air;
"(5) Documents to be registered with the Securities and Exchange
Commission;
"(6) Building construction permits;
"(7) Application for loan with banks, financial institutions, or other
financial intermedieries;
"(8) Application for mayor's permit;
"(9) Application for business license with the Department of Trade
and Industry; and
"(10) Such other documents which may hereafter be required
under rules and regulations to be promulgated by the Secretary of
Finance, upon recommendation of the Commissioner.
"In cases where a registered taxpayer dies, the administrator or
executor shall register the estate of the decedent in accordance
with Subsection (A) hereof and a new Taxpayer Identification
Number (TIN) shall be supplied in accordance with the provisions
of this Section.
"In the case of a nonresident decedent, the executor or
administrator of the estate shall register the estate with the
Revenue District Office where he is registered: Provided, however;
That in case such executor or administrator is not registered,
registration of the estate shall be made with and the Taxpayer
Identification Number (TIN) supplied by the Revenue District
Office having jurisdiction over his legal residence.
"Only one Taxpayer Identification Number (TIN) shall be assigned
to a taxpayer. Any person who shall secure more than one
Taxpayer Identification Number shall be criminally liable under the
provisions of Section 275 on 'Violation of Other Provisions of this
Code or Regulations in General.'"
What is impt here in the Tin is that the taxpayer should only have
1 TIN number. Hindi pwede 2 or more; otherwise, that will be a
violation.
"SEC. 237. Issuance of Receipts or Sales or Commercial Invoices. -
All persons subject to an internal revenue tax shall, for each sale
and transfer of merchandise or for services rendered valued at
Twenty-five pesos (P25.00) or more, issue duly registered receipts
or sale or commercial invoices, prepared at least in duplicate,
showing the date of transaction, quantity, unit cost and description
of merchandise or nature of service: Provided, however, That
where the receipt is issued to cover payment made as rentals,
commissions, compensation or fees, receipts or invoices shall be
issued which shall show the name, business style, if any, and
address of the purchaser, customer or client.
"The original of each receipt' or invoice shall be issued to the
purchaser, customer or client at the time the transaction is
effected, who, if engaged in business or in the exercise of
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
profession, shall keep and preserve the same in his place of
business for a period of three (3) years from the close of the
taxable year in which such invoice or receipt was issued, while the
duplicate shall be kept and preserved by the issuer, also in his
place of business, for a like period.
"The Commissioner may, in meritorious cases, exempt any person
subject to an internal revenue tax from compliance with the
provisions of this Section." [amended by 9337]
We mentioned this last time, that for purposes you will be issues
are receipt, the minimum amount is P35 or more to demand the
issuance of a receipt.
Now the issuance of the receipts, it is not necessary that there is
an OR or official receipt or invoice because the cash register
receipts is a valid replacement of the OR. But it is required that
these cash registered machines are registered with the BIR so that
the receipts that it will print in the cash register is a valid
equivalent of the receipt without need of an issuance of another
OR. So these cash registers require registration with the BIR.
Your book of accounts also, before you use them to record, your
journals, are also required to be reguistered with the BIR.
SEC. 238. Printing of Receipts or Sales or Commercial Invoices. -
All persons who are engaged in business shall secure from the
Bureau of Internal Revenue an authority to print receipts or sales
or commercial invoices before a printer can print the same.
No authority to print receipts or sales or commercial invoices shall
be granted unless the receipts or invoices to be printed are serially
numbered and shall show, among other things, the name,
business style, Taxpayer Identification Number (TIN) and business
address of the person or entity to use the same, and such other
information that may be required by rules and regulations to be
promulgated by the Secretary of Finance, upon recommendation
of the Commissioner.
All persons who print receipt or sales or commercial invoices shall
maintain a logbook/register of taxpayers who availed of their
printing services. The logbook/register shall contain the following
information:
(1) Names, Taxpayer Identification Numbers of the persons or
entities for whom the receipts or sales or commercial invoices
were printed; and
(2) Number of booklets, number of sets per booklet, number of
copies per set and the serial numbers of the receipts or invoices in
each booklet.
This will require also permission and authority of the BIR which
gives authority now to the printing press to print receipts or
commercial invoices to the taxpayer. SO you cant just print
receipts for your business or practice. The printing press needs
authority. Once the receipts are printed already, then dadalhin ulit
ito sa BIR for the corresponding registration. Now, the BIR has
required pro forma or form of the receipts OR, commercial or
sales invoices. There is now a standard form for the BIR to
require taxpayers to follow.
SEC. 239. Sign to be Exhibited by Distiller, Rectifier, Compounder,
Repacker and Wholesale Liquor Dealer. - Every person engaged in
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
distilling or rectifying spirits, compounding liquors, repacking wines
or distilled spirits, and every wholesale liquor dealer shall keep
conspicuously on the outside of his place of business a sign
exhibiting, in letters not less than six centimeters (6 cms.) high,
his name or firm style, with the words 'Registered Distiller,'
'Rectifier of Spirits,' 'Compounder of Liquors,' 'Repacker of Wines
or Distilled Spirits,' or 'Wholesale Liquor Dealer,' as the case may
be, and his assessment number.
In the event the taxpayer dies, we have
SEC. 242. Continuation of Business of Deceased Person. - When
any individual who has paid the annual registration fee dies, and
the same business is continued by the person or persons
interested in his estate, no additional payment shall be
required for the residue of the term which the tax was
paid: Provided, however, That the person or persons interested in
the estate should, within thirty (30) days from the death of the
decedent, submit to the Bureau of Internal Revenue or the
regional or revenue District Office inventories of goods or stocks
had at the time of such death.
The requirement under this Section shall also be applicable in the
case of transfer of ownership or change of name of the business
establishment.
Now, the rule-making requirement. The statute is the NIRC, in the
implementation of the provisions of the NIRC, there will be
corresponding revenue regulations or rules.
Who has authority to make rules and regulations in the
implementation of the provisions of the NIRC?
SEC. 244. Authority of Secretary of Finance to Promulgate Rules
and Regulations. - The Secretary of Finance, upon
recommendation of the Commissioner, shall promulgate all needful
rules and regulations for the effective enforcement of the
provisions of this Code.
NOT THE COMMISSIONER, but with the Secretary of Finance.
So if the commissioner will make rules and regulations that is null
and void. That authority is to the SOF, pwede lang
magrecommend si Commissioner, not promulgate.
Then another item is
SEC. 245. Specific Provisions to be Contained in Rules and
Regulations. - The rules and regulations of the Bureau of Internal
Revenue shall, among other thins, contain provisions specifying,
prescribing or defining:
(a) The time and manner in which Revenue Regional Director shall
canvass their respective Revenue Regions for the purpose of
discovering persons and property liable to national internal
revenue taxes, and the manner in which their lists and records of
taxable persons and taxable objects shall be made and kept;
(b) The forms of labels, brands or marks to be required on goods
subject to an excise tax, and the manner in which the labelling,
branding or marking shall be effected;
(c) The conditions under which and the manner in which goods
intended for export, which if not exported would be subject to an
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
excise tax, shall be labelled, branded or marked;
(d) The conditions to be observed by revenue officers respecting
the institutions and conduct of legal actions and proceedings;
(e) The conditions under which goods intended for storage in
bonded warehouses shall be conveyed thither, their manner of
storage and the method of keeping the entries and records in
connection therewith, also the books to be kept by Revenue
Inspectors and the reports to be made by them in connection with
their supervision of such houses;
(f) The conditions under which denatured alcohol may be removed
and dealt in, the character and quantity of the denaturing material
to be used, the manner in which the process of denaturing shall be
effected, so as to render the alcohol suitably denatured and unfit
for oral intake, the bonds to be given, the books and records to be
kept, the entries to be made therein, the reports to be made to
the Commissioner, and the signs to be displayed in the business
ort by the person for whom such denaturing is done or by whom,
such alcohol is dealt in;
(g) The manner in which revenue shall be collected and paid, the
instrument, document or object to which revenue stamps shall be
affixed, the mode of cancellation of the same, the manner in
which the proper books, records, invoices and other papers shall
be kept and entries therein made by the person subject to the tax,
as well as the manner in which licenses and stamps shall be
gathered up and returned after serving their purposes;
(h) The conditions to be observed by revenue officers respecting
the enforcement of Title III imposing a tax on estate of a
decedent, and other transfers mortis causa, as well as on gifts and
such other rules and regulations which the Commissioner may
consider suitable for the enforcement of the said Title III;
(i) The manner in which tax returns, information and reports shall
be prepared and reported and the tax collected and paid, as well
as the conditions under which evidence of payment shall be
furnished the taxpayer, and the preparation and publication of tax
statistics;
(j) The manner in which internal revenue taxes, such as income
tax, including withholding tax, estate and donor's taxes, value-
added tax, other percentage taxes, excise taxes and documentary
stamp taxes shall be paid through the collection officers of the
Bureau of Internal Revenue or through duly authorized agent
banks which are hereby deputized to receive payments of such
taxes and the returns, papers and statements that may be filed by
the taxpayers in connection with the payment of the tax: Provided,
however, That notwithstanding the other provisions of this Code
prescribing the place of filing of returns and payment of taxes, the
Commissioner may, by rules and regulations, require that the tax
returns, papers and statements that may be filed by the taxpayers
in connection with the payment of the tax. Provided, however,
That notwithstanding the other provisions of this Code prescribing
the place of filing of returns and payment of taxes, the
Commissioner may, by rules and regulations require that the tax
returns, papers and statements and taxes of large taxpayers be
filed and paid, respectively, through collection officers or through
duly authorized agent banks: Provided, further, That the
Commissioner can exercise this power within six (6) years from
the approval of Republic Act No. 7646 or the completion of its
comprehensive computerization program, whichever comes earlier:
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Provided, finally, That separate venues for the Luzon, Visayas and
Mindanao areas may be designated for the filing of tax returns and
payment of taxes by said large taxpayers.
For the purpose of this Section, 'large taxpayer' means a
taxpayer who satisfies any of the following criteria;
(1) Value-Added Tax (VAT) - Business establishment with
VAT paid or payable of at least One hundred thousand
pesos (P100,000) for any quarter of the preceding taxable
year;
(2) Excise tax - Business establishment with excise tax
paid or payable of at least One million pesos (P1,000,000)
for the preceding taxable year;
(3) Corporate Income Tax - Business establishment with
annual income tax paid or payable of at least One million
pesos (P1,000,000) for the preceding taxable year; and
(4) Withholding tax - Business establishment with
withholding tax payment or remittance of at least One
million pesos (P1,000,000) for the preceding taxable year.
Provided, however, That the Secretary of Finance, upon
recommendation of the Commissioner, may modify or add
to the above criteria for determining a large taxpayer after
considering such factors as inflation, volume of business,
wage and employment levels, and similar economic
factors.
The penalties prescribed under Section 248 of this Code
shall be imposed on any violation of the rules and
regulations issued by the Secretary of Finance, upon
recommendation of the Commissioner, prescribing the
place of filing of returns and payments of taxes by large
taxpayers. 1
Itong mga large taxpayers, ito yun sila usually binabalikbalikan ng
BIR every year for assessment. They pay a good sum, annually for
taxes. So theres no use to run after small taxpayers because the
government will be able to collect less, unless that seemingly small
taxpayer is evading taxes. In that case, that small taxpayer will be
subject of investigation for purposes of collecting taxes and
revenues.
Now, of recent, large taxpayers are required to make electronic
filing of their tax obligations and pay the tax also through online
payment EFPS (electronic filing and payment system) to those
who are classified as large taxpayers. So they dont file returns
mano-mano. Once the return is electronically filed, and the
payment made, it also goes through the system because there
were practices before na if it was made through the collecting
banks, there are times the CB will remit to the BIR for some time.
So patulugin lang yan for 1 week before the actual remittance,
that is a sufficient amount of time for interest to accrue on the
part of the bank. So malulugi ang govt, so they have resorted to
EFPS.
SEC. 246. Non- Retroactivity of Rulings. - Any revocation,
modification or reversal of any of the rules and regulations
1
Dean quotes the codal, BUT please c.f. Casasola Vol. 1. New Criteria are
provided for under RR 17-2010, Sec. 5. (pg. 244-245].
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
promulgated in accordance with the preceding Sections or any of
the rulings or circulars promulgated by the Commissioner shall not
be given retroactive application if the revocation,
modification or reversal will be prejudicial to the
taxpayers, except in the following cases:
(a) Where the taxpayer deliberately misstates or omits material
facts from his return or any document required of him by the
Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on which
the ruling is based; or
(c) Where the taxpayer acted in bad faith.
Now, like all the rest of the statutes we have as well regulations
implementing the statutes, we always follow prospective
application, we dont apply retroactive because again in our
principles, only a tax as well as other laws, should be prospective
in application.
As a rule, there is no retroactive application.
The following are the exceptions:
(a) Where the taxpayer deliberately misstates or omits material
facts from his return or any document required of him by the
Bureau of Internal Revenue;
(b) Where the facts subsequently gathered by the Bureau of
Internal Revenue are materially different from the facts on which
the ruling is based; or
Comment: the common ruling where the BIR flip-flops
is in the case of *inaudible* in the case of investors, if
you read in the principles pabago bago WON they are
subject to DST, or VAT. So there has been a flip-floping
of these rulings. You also have flip-floping in the manner
of how claims for refund or the zero-rated taxpayers,
how they may claim a refund. Because even if there is
that statutory provision, the BIR will always have a mind
of its own.
Like in 228: Under 228, once your protest is filed, the
BIR or the Commissioner has 120 days to decide. Now, if
there is no decision, then you are given 30 days to bring
it to the CTA; otherwise the decision becomes final and
executory. So the BIR has to follow that, without
analyzing that there is no decision that will become final
and executory, hindi nga nakadecide eh. Mabuti sana
sinabi the assessment becomes final and executory, it
does not. So thats the law. In several cases, they have
insisted na since the protest has stayed in the office of
the commissioner for 120 days, they can now pursue
collecting kasi hindi inakyat sa CTA. And this has
happened in several occasions.
The SC has made a categorical ruling. There are 2
options available to the taxpayer:
1. If naglapse yung 12o days to decide, the taxpayer
may opt to go to the CTA within 30 days; or
2. Taxpayer may waive the decision of the
commissioner. Pag may decision, and it is a denial,
it goes to the CTA.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
So that has been clarified but despite that clarification,
may ganun paring scenario. They will insist na hindi nila
inakyat under sec. 228 kasi they understood the
provision of the law. So that happens. BIR will insist on
their own interpretation even not in the law.
(c) Where the taxpayer acted in bad faith.
So with these 3 cases are the exceptions to demand retroactivity.
TITLE X
STATUTORY OFFENSES AND PENALTIES
We discussed this already
SEC. 248. - Civil Penalties. -
(A) There shall be imposed, in addition to the tax required to be
paid, a penalty equivalent to twenty-five percent (25%) of the
amount due, in the following cases:
(1) Failure to file any return and pay the tax due thereon as
required under the provisions of this Code or rules and regulations
on the date prescribed; or
(2) Unless otherwise authorized by the Commissioner, filing a
return with an internal revenue officer other than those with whom
the return is required to be filed; or
(3) Failure to pay the deficiency tax within the time prescribed for
its payment in the notice of assessment; or
(4) Failure to pay the full or part of the amount of tax shown on
any return required to be filed under the provisions of this Code or
rules and regulations, or the full amount of tax due for which no
return is required to be filed, on or before the date prescribed for
its payment.
(B) In case of willful neglect to file the return within the period
prescribed by this Code or by rules and regulations, or in case a
false or fraudulent return is willfully made, the penalty to be
imposed shall be fifty percent (50%) of the tax or of the deficiency
tax, in case, any payment has been made on the basis of such
return before the discovery of the falsity or fraud: Provided, That a
substantial underdeclaration of taxable sales, receipts or income,
or a substantial overstatement of deductions, as determined by
the Commissioner pursuant to the rules and regulations to be
promulgated by the Secretary of Finance, shall constitute prima
facie evidence of a false or fraudulent return: Provided, further,
That failure to report sales, receipts or income in an amount
exceeding thirty percent (30%) of that declared per return, and a
claim of deductions in an amount exceeding (30%) of actual
deductions, shall render the taxpayer liable for substantial
underdeclaration of sales, receipts or income or for overstatement
of deductions, as mentioned herein.
So when you receive an assessment notice, it does not only
include the deficiency tax but it also includes all other penalties
and the rest of surcharges.
We also have the different crimes and offenses
SEC. 253. General Provisions. -
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
(a) Any person convicted of a crime penalized by this Code shall,
in addition to being liable for the payment of the tax, be subject to
the penalties imposed herein: Provided, That payment of the tax
due after apprehension shall not constitute a valid defense in any
prosecution for violation of any provision of this Code or in any
action for the forfeiture of untaxed articles.
(b) Any person who willfully aids or abets in the commission of a
crime penalized herein or who causes the commission of any such
offense by another shall be liable in the same manner as the
principal.
(c) If the offender is not a citizen of the Philippines, he shall be
deported immediately after serving the sentence without further
proceedings for deportation. If he is a public officer or employee,
the maximum penalty prescribed for the offense shall be imposed
and, in addition, he shall be dismissed from the public service and
perpetually disqualified from holding any public office, to vote and
to participate in any election. If the offender is a Certified Public
Accountant, his certificate as a Certified Public Accountant shall,
upon conviction, be automatically revoked or cancelled.
(d) In the case of associations, partnerships or corporations, the
penalty shall be imposed on the partner, president, general
manager, branch manager, treasurer, officer-in-charge, and the
employees responsible for the violation.
(e) The fines to be imposed for any violation of the provisions of
this Code shall not be lower than the fines imposed herein or twice
the amount of taxes, interest and surcharges due from the
taxpayer, whichever is higher.
Again, we mentioned that despite the penal provisions and
sanctions under the NIRC, it does not make our tax laws penal or
criminal in nature, they are still civil.
So you have the subsequent provisions on the statutory offenses.
SEC. 281. Prescription for Violations of any Provision of this Code.
- All violations of any provision of this Code shall prescribe after
Five (5) years.
Prescription shall begin to run from the day of the commission of
the violation of the law, and if the same be not known at the time,
from the discovery thereof and the institution of judicial
proceedings for its investigation and punishment.
The prescription shall be interrupted when proceedings are
instituted against the guilty persons and shall begin to run again if
the proceedings are dismissed for reasons not constituting
jeopardy.
The term of prescription shall not run when the offender is absent
from the Philippines.
SEC. 282. Informer's Reward to Persons Instrumental in the
Discovery of Violations of the National Internal Revenue Code and
in the Discovery and Seizure of Smuggled Goods. -
(A) For Violations of the National Internal Revenue Code. Any
person, except an internal revenue official or employee, or other
public official or employee, or his relative within the sixth degree
of consanguinity, who voluntarily gives definite and sworn
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
information, not yet in the possession of the Bureau of Internal
Revenue, leading to the discovery of frauds upon the internal
revenue laws or violations of any of the provisions thereof, thereby
resulting in the recovery of revenues, surcharges and fees and/or
the conviction of the guilty party and/or the imposition of any of
the fine or penalty, shall be rewarded in a sum equivalent to ten
percent (10%) of the revenues, surcharges or fees recovered
and/or fine or penalty imposed and collected or One Million Pesos
(P1,000,000) per case, whichever is lower. The same amount of
reward shall also be given to an informer where the offender has
offered to compromise the violation of law committed by him and
his offer has been accepted by the Commissioner and collected
from the offender: Provided, That should no revenue, surcharges
or fees be actually recovered or collected, such person shall not be
entitled to a reward: Provided, further, That the information
mentioned herein shall not refer to a case already pending or
previously investigated or examined by the Commissioner or any
of his deputies, agents or examiners, or the Secretary of Finance
or any of his deputies or agents: Provided, finally, That the reward
provided herein shall be paid under rules and regulations issued by
the Secretary of Finance, upon recommendation of the
Commissioner.
(B) For Discovery and Seizure of Smuggled Goods.To encourage
the public to extend full cooperation in eradicating smuggling, a
cash reward equivalent to ten percent (10%) of the fair market
value of the smuggled and confiscated goods or One Million Pesos
(P1,000,000) per case, whichever is lower, shall be given to
persons instrumental in the discovery and seizure of such
smuggled goods.
The cash rewards of informers shall be subject to income tax,
collected as a final withholding tax, at a rate of ten percent (10%).
The Provisions of the foregoing Subsections notwithstanding, all
public officials, whether incumbent or retired, who acquired the
information in the course of the performance of their duties during
their incumbency, are prohibited from claiming informer's reward.
Now, Title XI, ito yung internal revenue allotment. All money
generated from taxation under NIRC will all go to the national
treasury, unless there is a law where a portion of that revenue will
go to a special purpose or fund. So all these will accrue to the
national treasury. Congress will act on the general appropriations
act for the proper budgeting ang disbursements, and allocating the
budget and sums of money for the appropriate government
agencies.
SEC. 283. Disposition of National Internal Revenue. - National
Internal revenue collected and not applied as herein above
provided or otherwise specially disposed of by law shall accrue to
the National Treasury and shall be available for the general
purposes of the Government, with the exception of the amounts
set apart by way of allotment as provided for under Republic Act
No. 7160, otherwise known as the Local Government Code of
1991.
In addition to the internal revenue allotment as provided for in the
preceding paragraph, fifty percent (50%) of the national taxes
collected under Sections 106, 108 and 116 of this Code in excess
of the increase in collections for the immediately preceding year
shall be distributed as follows:
(a) Twenty percent (20%) shall accrue to the city or municipality
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
where such taxes are collected and shall be allocated in
accordance with Section 150 of Republic Act No. 7160, otherwise
known as the Local Government Code of 1991; and
(b) Eighty percent (80%) shall accrue to the National Government.
SEC. 284. Allotment for the Commission on Audit. - One-half of
one percent (1/2 of 1%) of the collections from the national
internal revenue taxes not otherwise accruing to special accounts
in the general fund of the national government shall accrue to the
Commission on Audit as a fee for auditing services rendered to
local government units, excluding maintenance, equipment, and
other operating expenses as provided for in Section 21 of
Presidential Decree No. 898.
The Secretary of Finance is hereby authorized to deduct from the
monthly internal revenue tax collections an amount equivalent to
the percentage as herein fixed, and to remit the same directly to
the Commission on Audit under such rules and regulations as may
be promulgated by the Secretary of Finance and the Chairman of
the Commission on Audit.
SEC. 285. Allotment for the Bureau of Internal Revenue. - An
amount equivalent to five percent (5%) of the excess of actual
collections of national internal revenue taxes over the collection
goal shall accrue to the special fund of the Bureau of Internal
Revenue and shall be treated as receipts automatically
appropriated. Said amount shall be utilized as incentive bonus for
revenue personnel, purchase of necessary equipment and facilities
for the improvement of tax administration, as approved by the
Commissioner: Provided, That the President may, upon
recommendation of the Commissioner, direct that the excess be
credited to a Special Account in the National Treasury to be held in
the reserve available for distribution as incentive bonus in the
subsequent years.
The Secretary of Finance is hereby authorized to transfer from the
Treasury an amount equivalent to the percentage as herein fixed
and to remit the same directly to the Bureau of Internal Revenue
under such rules and regulations as may be promulgated by the
Secretary of Finance.
An amount equivalent to five percent (5%) of the excess of actual
collections of national internal revenue taxes over the collection
goal shall accrue to the special fund of the Bureau of Internal
Revenue this is an incentive on the part of the BIR. Merong
collection target, that is a collection target or goal versus the
actual collection. And in the middle of the year, if mafoforsee nila
na hindi maabot yung collection goal, irereduce nila yung
collection goal because tatamaan din sila ng kanilang 5% if walang
excess so if there is an excess collection from the target goal, then
that is an incentive of the BIR.
So if they want to collection 100B, then the actual collection is
110B, they will be entitled to the incentive. In relation to that,
there is an incentive, or a law that grants an incentive to the BIR
and the BOC, to the personnel of such bureaus giving them the
system of rewards and punishment. If they are able to achieve or
collect more than the target, then an incentive will be given.
That law was challenged to be unconstitutional kasi bakit ang BIR
and BOC ang may ganoong incentive or system of reward. And the
SC upheld the constitutionality of that law kasi sila man yung main
source of revenue collection ang BIR, the LTO cannot be the main
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
source. So the main source are taken from BIR and BOC, so sila
yung may insentibo. So that law was held as constitutional.
SEC. 289. Special Financial Support to Beneficiary Provinces
Producing Virginia Tobacco. - The financial support given by the
National Government for the beneficiary provinces shall be
constituted and collected from the proceeds of fifteen percent
(15%) of the excise taxes on locally manufactured Virginia-type of
cigarettes.
The funds allotted shall be divided among the beneficiary
provinces pro-rata according to the volume of Virginia tobacco
production.
Production producing Virginia tobacco shall be the beneficiary
provinces under Republic Act No. 7171. Provided, however, that to
qualify as beneficiary under R.A. No. 7171, a province must have
an average annual production of Virginia leaf tobacco in an
amount not less than one million kilos: Provided, further, that the
Department of Budget and Management (DBM) shall each year
determine the beneficiary provinces and their computed share of
the funds under R.A. No. 7171, referring to the National Tobacco
Administration (NTA) records of tobacco acceptances, at the
tobacco trading centers for the immediate past year.
The Secretary of Budget and Management is hereby directed to
retain annually the said funds equivalent to fifteen percent (15%)
of excise taxes on locally manufactured Virginia type cigarettes to
be remitted to the beneficiary provinces qualified under R.A. No.
7171.
The provision of existing laws to the contrary notwithstanding, the
fifteen percent (15%) share from government revenues mentioned
in R.A. No. 7171 and due to the Virginia tobacco-producing
provinces shall be directly remitted to the provinces concerned.
Provided, That this Section shall be implemented in accordance
with the guidelines of Memorandum Circular No. 61-A dated
November 28, 1993, which amended Memorandum Circular No.
61, entitled "Prescribing Guidelines for Implementing Republic Act
No. 7171", dated January 1, 1992.
Provided, further, That in addition to the local government units
mentioned in the above circular, the concerned officials in the
province shall be consulted as regards the identification of projects
to be financed.
Nagstory si Dean na diri daw masabit si Erap, part of the money
here are supposed to be given to the farmers. And erap was the
one indorsing the check here to pay the money, sa bank sa
malacanang pa nagpa-encash.
SEC. 290. Congressional Oversight Committee. -
A Congressional Oversight Committee, hereinafter referred to as
the Committee, is hereby constituted in accordance with the
provisions of this Code. The Committee shall be composed of the
Chairmen of the Committee on Ways and Means of the Senate and
House Representatives and four (4) additional members from each
house, to be designated by the Speaker of the House of
Representatives and the Senate President, respectively.
The Committee shall, among others, in aid of legislation:
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
(1) Monitor and ensure the proper implementation of Republic Act
No. 8240;
(2) Determine that the power of the Commissioner to compromise
and abate is reasonably exercised;
(3) Review the collection performance of the Bureau of Internal
Revenue; and
(4) Review the implementation of the programs of the Bureau of
Internal Revenue.
In furtherance of the hereinabove cited objectives, the Committee
is empowered to require of the Bureau of Internal Revenue,
submission of all pertinent information, including but not limited
to: industry audits; collection performance data; status report on
criminal actions initiated against persons; and submission of
taxpayer returns: Provided, however, That any return or return
information which can be associated with, or otherwise identify,
directly or indirectly, a particular taxpayer shall be furnished the
Committee only when sitting in Executive Session unless such
taxpayer otherwise consents in writing to such disclosure.
This has been constituted in aid of legislation, not in aid of re-
election. Annually, the commissioner as well as the BOC report
to the Congressional Oversight, to look at their collection goals,
targets, actual collections, WON they are within the performance
targets or underperformed, or overperformed and report to the
COC some loopholes or problema sa law. So they will recommend
the corresponding remedial legislation to correct a loophole or
leakage in the law, or recommend proper legislation to enhance
collection.
And lastly, is the NIRC a general law, or special law?
Notes from Tax 1:
Tax laws are not in the nature of a general law, like the
civil code. So, if you have problems on what should
prevail on certain requirements, like publication. In the
Civil Code, you have the requirements of general law
which is publication in the Official Gazette (OG). Tax
laws have publication requirements by publishing it in a
newspaper of national circulation.
What will you use? You use the requirements of the
special law because tax laws, being special laws, prevail
over the general law, like the Civil Code. So, if you have
that sort of conflict on what you should follow, then, you
should follow the special law, not the requirements in the
general law.
That ends our NIRC.
Now The Next item we are going to take up is local taxation.
This is the local government code.
LOCAL TAXES IN THE LOCAL GOVERNMENT CODE
So for local taxation, this is RA 7160 or the Local Government
Code.
So local taxation, you have sections 128 196. These
are the provisions concerning or relating to local taxes.
We also have 124 -127, this is, local initiative and
referendum.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Then you have Section 48 -59 on Ordinances.
These are the local taxes.
Then from local taxation, we have real property taxation Still ra
7160 (197-283) so these are the pertinent provisions on local tax
and real property tax.
Now, briefly, the tax principles behind local taxation are the same
principles used in the states power of taxation. Meaning, the
principles behind the power of taxation of the state like the
requirement on due process, etc, are the same principles that we
apply to local tax.
What is the difference between states power of taxation and local
taxation power is that the Local taxing power is not inherent, the
former is inherent. Now, there are 2 ways in the grant of the
taxing power to the LGUs (or municipal corporations) wherein the
local taxing power is granted:
1. By legislation act of congress where they create a LGU
it carries with it in the granting or the creation of the
LGU the power to tax. Remember that once the power to
tax is granted, it carries with it the power to grant
exemptions, so same in the states power. So if it has a
power to tax, it also has the power to exempt.
2. By the Constitution
So these are 2 ways. In our political structure, the grant of local
taxing power is by way of constitutional grant. We need not
legislate to give the power because the consti already gives the
power.
Art. X. Section 5. Each local government unit shall have the power
to create its own sources of revenues and to levy taxes, fees and
charges subject to such guidelines and limitations as the Congress
may provide, consistent with the basic policy of local autonomy.
Such taxes, fees, and charges shall accrue exclusively to the local
governments.
Likewise, when you go further to the autonomous regions, they
are given by the Consti, like the LGUS, taxing power by the
Constitution.
Since the power is now constitutionally granted, the constitutional
provision sets a limit that while its LGU will have the power to
create its own sources of revenue it will be subject to such
guidelines and limitations as congress will provide. The guidelines
and limitations are spelled out in the LGC. The LGC gives the
guidelines and limitations. So congress enacted the LGC which will
be the guiding rules or guidelines within which every LGU can
exercise its power. Again, the LGC is not the grant of the taxing
power because the Consti already granted. Congress has to
legislate the scope and guideline of the power.
Outside of the LGC, ito lang pwede sa municipalities, cities, they
cannot enact outside taxes not granted by the LGC because the
LGC already defines anong taxes ang pwede sa munisipyo,
siyudad, probinsya. The LGC did not give the power, it is the
constitution. The LGC is the law which the constitution has
provided the guidelines and limitations as congress will provide.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
January 22, 2015
We will go to Local Taxation. This is under RA 7160, the Local
Government Code of 1991. The LGC is the law referred to by
section 5 article 10 of the constitution that the taxing powers of
the LGU is subject to such guidelines and limitations as congress
may provide. Congress enacted RA 7160 to provide the guidelines
and limitations. The taxing power is already granted by the
Constitution to the LGU.
Section 120-127 LCG are the provisions on local initiative and
referendum. Under the Constitution, we have the peoples initiative
and referendum and congress enacted a law in coneection with
that constitutional provision on how the peoples initiative and
referendum can be exercised. Under the law, since the power of
taxation emanates from the sovereignty and the sovereignty is the
people, the people can legislate without going to congress. As an
exception to the non- delegation of the taxing power, you have
peoples initiative and referendum. What is done is that, there is a
proposition that will be submitted to the electorate and the
registered voters will sign on that proposition and this signatures
being gathered will be submitted to COMELEC to determine
whether it complied with the law. At least 10% of each legislative
district has agreed to the proposition. It is difficult to gather
signatures like before there was a campaign to repeal the EVAT,
we went to churches, malls, plazas to gather signature. Once it is
established that the minimum has been complied with, the
ccomelec then will call for a referendum submitting now the
proposition to the electorate. Electorates now will now decide
whether they agree or not. This is not only done for matters of
taxation. It can be done to all other kinds of legislation for non-
revenue measures.
Section 120. Local Initiative Defined. - Local initiative is the legal
process whereby the registered voters of a local government unit
may directly propose, enact, or amend any ordinance.
Later we will proceed to different taxes that are allowed to each
and every LGU. With that, hindi yan sya automatic na once RA
7160 becomes effective eh pwede na iimpose agad ng LGU. No.
the LGU has to legislate. It has to enact an ordinance. Like the city
of Davao, meron tayong revenue code of dvo city. Likewise, the
provinces and municipalities can enact an ordinance. So the local
legislative function is done through the Sanggunian.
So you have that procedure under section 122.
Section 122. Procedure in Local Initiative. -
(a) Not less than one thousand (1,000) registered voters
in case of provinces and cities, one hundred (100) in
case of municipalities, and fifty (50) in case of
barangays, may file a petition with the sanggunian
concerned proposing the adoption, enactment, repeal, or
amendment of an ordinance.
(b) If no favorable action thereon is taken by the
sanggunian concerned within thirty (30) days from its
presentation, the proponents, through their duly
authorized and registered representatives, may invoke
their power of initiative, giving notice thereof to the
sanggunian concerned.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(c) The proposition shall be numbered serially starting
from Roman numeral I. The COMELEC or its designated
representative shall extend assistance in the formulation
of the proposition.
(d) Two (2) or more propositions may be submitted in an
initiative.
(e) Proponents shall have ninety (90) days in case of
provinces and cities, sixty (60) days in case of
municipalities, and thirty (30) days in case of barangays,
from notice mentioned in subsection (b) hereof to collect
the required number of signatures. (f) The petition shall
be signed before the election registrar. or his designated
representatives, in the presence of a representative of
the proponent, and a representative of the sanggunian
concerned in a public place in the local government unit,
as the case may be. Stations for collecting signatures
may be established in as many places as may be
warranted.
(g) Upon the lapse of the period herein provided, the
COMELEC, through its office in the local government unit
concerned, shall certify as to whether or not the required
number of signatures has been obtained. Failure to
obtain the required number defeats the proposition.
(h) If the required number of signatures is obtained, the
COMELEC shall then set a date for the initiative during
which the proposition shall be submitted to the
registered voters in the local government unit concerned
for their approval within sixty (60) days from the date of
certification by the COMELEC, as provided in subsection
(g) hereof, in case of provinces and cities, forty-five (45)
days in case of municipalities, and thirty (30) days in
case of barangays. The initiative shall then be held on
the date set, after which the results thereof shall be
certified and proclaimed by the COMELEC.
The other provisions are the political setup of the LGUs. The LGC
does not only provide the political structures and electorate within
the local government but other powers of the LGU.
We have section 128.
Section 128. Scope. - The provisions herein shall govern the
exercise by provinces, cities, municipalities, and barangays of their
taxing and other revenue-raising powers.
Section 129. Power to Create Sources of Revenue. - Each local
government unit shall exercise its power to create its own sources
of revenue and to levy taxes, fees, and charges subject to the
provisions herein, consistent with the basic policy of local
autonomy. Such taxes, fees, and charges shall accrue exclusively
to the local government units.
Section 129 is the exact reproduction of section 5 article 10 of the
Constitution. Also, the taxes cannot be shared to the national
government.
Section 130
These principles here arent new. They are the same principles
that we learned in the states taxation. Ang pinagkaibahan lang
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
nito, broader lang ang sa states principles. (17:33) Dito, mas
klaro. For example:
(a) Taxation shall be uniform in each local government unit;
This is the same with the principle of equality and uniformity in
taxation. This means that in classifying taxpayers or who are to be
taxed or exempted, it shall conform to the requirement of
reasonable classification. There must be substantial distinction, it
must be germane to the purpose of the law, etc
Those requirements for a valid and reasonable classification are
the same requirements when we address the issue on uniformity.
In connection with the LGU, for purposes of uniformity, so
whenever the taxpayer is found within the LGU, the application of
the power to tax should be the same, not necessarily the rate.
Wherever he is found, it should uniformly apply.
(b) Taxes, fees, charges and other impositions shall:
(1) be equitable and based as far as practicable
on the taxpayer's ability to pay;
In the principle of taxation, when we say equity in taxation, it
means ability to pay.
(2) be levied and collected only for public
purposes;
Public purpose, this is not new. We discussed this in Tax 1, one
that is governmental, one that is for the common good, one that is
for the public welfare, etc. So as a rule, taxes should be for a
public purpose and that holds true when we talk about local taxes.
(3) not be unjust, excessive, oppressive, or
confiscatory;
This is the same thing as due process. That there must be a basis
both complying the substantive as well as procedural due process.
Taxes should not be unjust because that will not be a burden to
the taxpayer.
(4) not be contrary to law, public policy,
national economic policy, or in the restraint of
trade
Same with public purpose and legality or in consonance with
economic policy.
(c) The collection of local taxes, fees, charges and other
impositions shall in no case be let to any private person;
What did we learn in the states power of taxation? It is the
national govt that collects the tax. Its agency, the BIR for internal
revenue taxes. The Bureau of Customs for the tariff and customs
duties. Now, in local taxation, sino yung tax collector? The Local
Treasurer. For each and every LGU, may local treasurer, barangay
treasurer, provincial treasurer, city treasurer. Walang BIR sa LGU
ha. The collecting arm is your local treasurers office. The LGU is
not allowed to outsource the collection by giving authority to
private person. The law does not allow that. Likewise also when
we collect internal revenue taxes as well as customs duties,
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Congress does not give authority to any private person to collect
them. It will be the collecting arm of the government.
(d) The revenue collected pursuant to the provisions of
this Code shall inure solely to the benefit of, and be
subject to the disposition by, the local government unit
levying the tax, fee, charge or other imposition unless
otherwise specifically provided herein; and,
That is in compliance with the last sentence od section 5 article 10
that the fees shall inure to the benefit exclusively to the LGU.
(e) Each local government unit shall, as far as
practicable, evolve a progressive system of taxation.
When we say progressive system, the local taxes must be more
direct taxes that indirect taxes. Indirect taxes are those that is
shifted or passed on. Unlike in direct tax, the one who is liable is
the one who shoulders the burden.
Ibig sabihin ba, ito lang ang principles? Yung other principles
which in the states power of taxation, which are not here found,
ibig sabihin ba inapplicable sila? No. They are still applicable even
though hindi sila binanggit ditto. Like yung prospectivity,
territoriality, wala naman yan dito, hindi klaro. But that is still
applicable in local taxation. Because the LGU cannot impose a tax
if the taxpayer is found in another province or city. The same thing
with the state, the state cannot tax a person found in another
state. Prospectivity. Tax laws are to be applied prospectively.
Section 131 are the definitions.
Then 132, local taxing authority = Sanggunian of LGU not by the
mayor or governor or barangay chairman.
Section 132. Local Taxing Authority. - The power to impose a tax,
fee, or charge or to generate revenue under this Code shall be
exercised by the sanggunian of the local government unit
concerned through an appropriate ordinance.
Then section 133. It is the list of those taxes not authorized to all
LGUs. Why> because kinokolekta na sya ng government or
kinokolekta na sya ng customs. As a rule, there is no double
taxation there because that are two taxing authorities but
Congress or the law prohibited those another set of tax similar.
Section 133. Common Limitations on the Taxing Powers of Local
Government Units. - Unless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:
(a) Income tax, except when levied on banks and other
financial institutions;
The LGU cannot enact an ordinance to collect income tax except
when levied on banks and other financial institutions.
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and
other acquisitions mortis causa, except as otherwise
provided herein;
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
(d) Customs duties, registration fees of vessel and
wharfage on wharves, tonnage dues, and all other kinds
of customs fees, charges and dues except wharfage on
wharves constructed and maintained by the local
government unit concerned;
(e) Taxes, fees, and charges and other impositions upon
goods carried into or out of, or passing through, the
territorial jurisdictions of local government units in the
guise of charges for wharfage, tolls for bridges or
otherwise, or other taxes, fees, or charges in any form
whatsoever upon such goods or merchandise;
Naiba ito from the enumeration. What is prohibited is that, the
local government will enact an ordinance imposing by way of
charges or wharfage these goods are carried into or out of or
just passing by in that LGU. For example: city of davao, (drawing
si sir, I think) basta naa daw muagi sa davao carried into or out of
or passing, the city will impose 50 cents per kilo. So, you are a
koprador/kobrador(?) in dvo del norte but he gets his goods in
dvo del sur. So, to transport his goods, he has to pass through
davao city. Alangan magdaan sya ng muagi pa syag CDO. Di
pwede yun. That is bawal. This will restrain trade. Even in the
guise of charges or wharfage.
(f) Taxes, fees or charges on agricultural and aquatic
products when sold by marginal farmers or fishermen;
Section 131 (p) "Marginal Farmer or Fisherman" refers to an
individual engaged in subsistence farming or fishing which shall be
limited to the sale, barter or exchange of agricultural or marine
products produced by himself and his immediate family;
(g) Taxes on business enterprises certified to by the
Board of Investments as pioneer or non-pioneer for a
period of six (6) and four (4) years, respectively from the
date of registration;
(h) Excise taxes on articles enumerated under the
national Internal Revenue Code, as amended, and taxes,
fees or charges on petroleum products;
(i) Percentage or value-added tax (VAT) on sales, barters
or exchanges or similar transactions on goods or services
except as otherwise provided herein;
(j) Taxes on the gross receipts of transportation
contractors and persons engaged in the transportation of
passengers or freight by hire and common carriers by
air, land or water, except as provided in this Code;
(k) Taxes on premiums paid by way or reinsurance or
retrocession;
(l) Taxes, fees or charges for the registration of motor
vehicles and for the issuance of all kinds of licenses or
permits for the driving thereof, except tricycles;
The grant of franchise to operate tricycles or pedicabs is given in
the LGU.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(m) Taxes, fees, or other charges on Philippine products
actually exported, except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and
Barangay Business Enterprises and cooperatives duly
registered under R.A. No. 6810 and Republic Act
Numbered Sixty-nine hundred thirty-eight (R.A. No.
6938) otherwise known as the "Cooperative Code of the
Philippines" respectively; and
(o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and local
government units.
Section 134. Scope of Taxing Powers. - Except as otherwise
provided in this Code, the province may levy only the taxes, fees,
and charges as provided in this Article.
From 134 to 141, this are the taxes authorized to provinces. The
law sets out what are these charges.
Section 135. Tax on Transfer of Real Property Ownership.
(a) The province may impose a tax on the sale ,
donation, barter, or on any other mode of transferring
ownership or title of real property at the rate of not more
than fifty percent (50%) of the one percent (1%) of the
total consideration involved in the acquisition of the
property or of the fair market value in case the monetary
consideration involved in the transfer is not substantial,
whichever is higher. The sale, transfer or other
disposition of real property pursuant to R.A. No. 6657
shall be exempt from this tax.
You would notice that the rate is a range. Not more than of
1%. The role now of provinces is to fix ano ngayon ang gagamitin
nila. Not all provinces have the same economic stature as the
other provinces. Capacity to pay is an important element in fixing
the rate. At the moment, yung progress ng probinsya is not fast(?)
so they could not impose a high rate or maximum rate so they
have to fix through an ordinance. (45:00)
Not more than 50% of 1%. Now, this law RA 7160 or the Local
Government Code has been enacted and approved way back in
1991 and this is already more than 10 years. 2001, 2011, more
than 20 years. So by this time the provinces have reached the
maximum rate of of 1%. Davao city collects like of 1%. Now,
this provision we call flexibility clause. For example the rate is
of 1%. What if like the LGC is already for 20 years and perhaps a
lot of provinces hit more than of 1%, pwede pa ba nilang i-
increase yun? Kung increase nila, should they go back in
congress? Because it is a flexibility provision under the LGC.
Section 191 provides the flexibility clause. Under 191, LGUs have
the authority to adjust the tax rates not oftener than once every
five years. So every 5 years you revisit your rate kung pwede pa
ba siyang iadjust, to cope up with the principle of fiscal adequacy.
Fiscal adequacy requires that the needs of government or the
budgetary tax laws should be able to adjust or reduce to the
needs. Without need of going to congress, LGUs, the law allows
them to revisit the range once in every 5 years. Kung mag-aadjust
sila, it should not exceed 10%. So by this time some provinces
have hit already the maximum because they are allowed under
191 that pwede nilang increase every 5 years not exceeding 10%.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So we do not have to go to congress to adjust the rates because
191 grants us that privilege. You have 135, the transfer of real
property ownership, 137, 136 the business of printing and
publication also the rate based on gross receipt, of 1%, then
you have the franchise tax under 137. Now questions in the bar,
suki ang franchise tax like when we encounter already in the
principles in the case of meralco, networks or telecoms. Meralco,
in the province of Laguna, under the LGC, they enacted an
ordinance for meralco to a local franchise tax. Meralco paid under
protest and challenged the assessment that they could not
encroach a local franchise tax because they are already paying a
national franchise tax because the grant of the utility of meralco is
covered by franchise tax.
And under the law running that franchise, they are said to pay a
certain percentage of the gross receipts as their franchise tax. So
masingil pa ba sila ng LGU for a local franchise tax when they are
already paying a national franchise tax? The SC under 137 ruled
that notwithstanding any exemption granted by any law or other
special law, a province may impose a tax on a business or
franchise.
The rate here is of 1%. So in other words, the notwithstanding
that they are liable on a national franchise tax or even when they
are exempted from the national franchise tax, the LGU can still
assess and collect against them a local franchise tax. We have the
smart case, globe telecom cases, ABS-CBN claiming that they are
not liable for the local franchise tax.
They can still be liable in the provision in 137. You have 138 the
tax on sand, gravel and other quarry resources. How is this
different from the quarrying tax resources or the excise tax? When
you go to the excise tax on the NIRC, the general products,
section 151 on tax of quarry resources. In 138, the province may
levy and collect not more than 10% of the fair marketing value in
the locality extracted from plants, beaches and seas, rivers and
other public water within its territorial jurisdiction.
In 138, the Local government collects a tax on quarry resources
when quarrying is done on public lands. In 151, it is the BIR which
collects the tax of quarry resources if the quarrying is done on
private lands. Kung private lands ang ginaquarry, NIRC comes in
to collect. If the quarrying is done on public lands, the LGU collects
then you have the sharing. We have a scandalous case in
Pampanga, because after the lahar, there is a heavy quarrying and
it has been the source of corruption of those in the executive
branch kasi sila yung nagmamaintain ng quarrying. So prior to ed
panlilio become governor, there are other groups na nagging
yumaman sa quarrying. Here in davao, the quarrying is heavy in
tigatto.
You have 139 the professional tax. So provinces collect this tax. To
those professionals, to those in the exercise of a practice of a
profession requiring governemtn examination the amount of 300
pesos, so the LGUs collect this PTI. If youre a lawyer, you cannot
practice kung hindi ka magbayad ng PTI. The receipt number or
the OR no is to be disclosed when you sign pleadings. That holds
true also to other professionals. They have to show their PTR no.
Now you paid your PTR in davao city, you are engaged by a davao
resident who has a case in Ilocos, so you have to go to Ilocos to
attend the court hearing, in their hinanapan ka ng PTR ng kalaban
mo dun then pinakita mo na nagbayad ka sa davao city. They
would object because Ilocos was not able to collect the PTR.
Payment of one to your locality where you practice applies in the
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
entire country. Payment of one constitutes allowance of practice in
the entire country. Now the 140 is the tax of amusement. This is
the tax in the highest rate. The province will levy an amusement
tax to be collected from the proprietors, lessees, on cinemas, and
etc at a rate of not more than 10% from gross receipts. So this
the amusement tax. The holding of opera in paragraph c,
concerts, dramas, recitals and etc., except pop, rock or similar
concerts shall be exempted from the amusement tax.
So you have this case of PBA v. CA when the PBA games were
then held in the ultra, city of Pasay assess PBA for the local
amusement tax so PBA contested to the assessment. Pasay city
claimed that kasama kayo jan sa 140 doon sa other places of
amusement. Is that correct? The SC said no. The principle of
ejusdem generis. Kung ano yung nadefine, yun yung mga similar
or kasimilar nila.
So is the PBA similar to theatres? Cinemas? No, so hindi sila
kasama sa other places of amusement. The case of province of
benguet in tax 1. Yung resorts na may swimming pool and spas,
they were assessed by the province of Benguet of amusement tax.
Liable ba sila? Pasok ba sila sa other places of amusement? Hindi
because other places of amusement must be construed on the
principle of ejusdem generis. It must be similar to theatres,
cinemas and etc. The city treasury assesses the Philippine
foundation of amusement tax, so they challenged the assessment.
They paid under protest.
141 the annual fix tax on every delivery truck or van of its
manufacturers, producers, wholesalers or retailers of certain
products not exceeding 500 pesos. Yung mga panel, yung mga
van. So the province will have to pass an ordinance on how much
it has to pay for the tax. 142, the. From 142 to 150, you have
there the taxes, fee and charges allowed to municiapalities. So you
have 143, the business tax. What types of businesses subject to
business tax.
144, the range of tax in the metro manila area. In Metro Manila,
iba yung set-up nila dun, it is the home of different cities and
Municipalities. All those cities and municipalities in Manila have
been clustered. If this munisipyo is part of a certain cluster and
would like to amend an ordinance, it must have the approval and
conformity of the rest of the members of the cluster.
Now on the range that they are allowed, the range should not
exceed 50% that is prescribed in the preceding section. So all
those munisipyos outside metro manila should follow the rates in
143. So in Metro Manila, they could go over and below the rates
prescribed in 143. 145, the retirement tax, you must pay for taxes
that are due prior to your retirement. 146, the payment of the
business tax, it should be payable for every separate and distinct
establishment.so yo will be liable to the business tax as to the
number of businesses that you have. So if you own several
businesses then you pay each line of business of its own business
tax. If the businesses of the person have the same rate then it
should be combined or consolidated.
147, fees and charges, municipalities may collect reasonable fees
and charges in businesses and occupation not excluded in 139. So
those business and occupation not mentioned in 139, pwde
sisingilin yun ng munisipyo. In 148, fees, proceedings and
licenses. 149, the fishery rentals, fees and charges, this is fishing
within the municipal waters. Yung case related dito sa 149 is the
Laguna lake vs CA, 251 S 52, there is this laguna lake
development authority which grants all the rights over the laguna
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
lake. So in the case of laguna lake, hindi yan controlado ng isang
municipality kasi laguna lake covers a lot of municipalities. So the
municipalities do not grant permits, it would be the laguna lake
authority. It has exclusive jurisdiction to issue permits for the use
of the water in laguna lake.
Prior to section 150, the assessment and collection of local taxes is
done where the principal office is located. So yung mga
pantations, factories are there in the different provinces and cities.
So prior to section 150, if the principal office will renew their
business permit, the states that they have mskin yung produkto is
doon na gawa sa davao city, it will be the city in Metro Manila
which collects the business tax kasi andun yung principal office. In
that set-up, the LGUs where the plantations are placed do not
have or will not receive a share in that collection. So meron na
ngayon ang 150, allocation. So itong mga LGUs where the
plantations are will have a just share of the local taxes. For
purposes of collection, under 143, maintaining a branch elsewhere
shall record the sale in the branch or sales outlet making the sales
or transaction.
In cases where there is no branch or sales outlet in the city or
municipality where the sale is done, the sale shall be recorded in
the principal office then the taxes shall be paid in the municipality.
30% of all sales recorded in the principal office shall be taxable in
the city or municipality where the principal office is located and the
70% of all sales recorded in the principal office shall be taxable in
the city where the factory or project office is located.
So you have sales and location in 150b,c,d,e. In other words, the
objective is hindi ma-zerohan yung municipality. Because you dont
make sales in the plantation. Sales are not made in the factory but
all sales are made in the principal office which sales which is in
another LGU. So following the rule, it will be the principal office or
the LGU where the office is located will collect the entire business
tax of all the sales made. So lugi yung mga LGU ng mga factories.
In the sales allocation, you have the principal office in LGU1 then
you have the factory/plantation in LGU2. While all sales are
recorded in the Principal office. However, the tax that it is going to
pay is on the basis of 30% of all sales recorded in the principal
office. sales allocation to LGU1 where the principal office is
located. LGU1 will not assess the entire sales. While all the
reporting is done in the principal office, hindi lahat dyan is
assessed. 30% lang. LGU 2 where the factory is located, yung
sales allocation nila is 70% of sales.
(c) In case of a plantation located at a place other than
the place where the factory is located, said seventy
percent (70%) mentioned in subparagraph (b) of
subsection (2) above shall be divided as follows:
(1) Sixty percent (60%) to the city or
municipality where the factory is located; and
(2) Forty percent (40%) to the city or
municipality where the plantation is located.
The principal office=LGU1 factory=LGU2 plantation=LGU3
Ano ang share ng principal office? Even if all sales are recorded
still in the principal office, the LGU whrer the principal office is
located will still have 30%. This 70% applies if the factory and
plantation are found in the same LGU. This time, the factory is
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
found in another LGU. Yung 70% nay un, iallocate na naman. The
60% of the 30% of sales will be the sales allocation ] to the LGU
where the principal office is located. In case where the factory is
found in another LGU, 60% of 70% of sales is the sales allocation
to the LGU where the factory is located. 40% of the 70% is the
sales allocation to the LGU where the plantation is located.
What if you have several factories in several LGUs? Yung 60:40 of
70%, mas lalo na syang ma-spread out. That is in letter d.
(d) In cases where a manufacturer, assembler, producer,
exporter or contractor has two (2) or more factories,
project offices, plants, or plantations located in different
localities, the seventy percent (70%) sales allocation
mentioned in subparagraph (b) of subsection (2) above
shall be prorated among the localities where the
factories, project offices, plants, and plantations are
located in proportion to their respective volumes of
production during the period for which the tax is due.
P. office = LGU1 factory 1= LGU 2 factory 2=LGU 3
factory 3=LGU4
Ung 30% ganon parin sa LGU1. Yung factory ordinarily,
70% of sales. But since they are found indifferent LGUs,
the 70% will now be allocated. It will now depend on the
production on each factory. Actual production of the
factory over total production of all the factories. In other
words, factory 1, his percentage of actual over total
times 70%.
Factory 1 = Actual production_____ X 70%
Total Production
Ung variable jan is ung actual production mo. This will be your
formula.
(e) The foregoing sales allocation shall be applied
irrespective of whether or not sales are made in the
locality where the factory, project office, plant, or
plantation is located
January 27, 2015
Section 151. Scope of Taxing Powers. - Except as otherwise
provided in this Code, the city, may levy the taxes, fees, and
charges which the province or municipality may impose: Provided,
however, That the taxes, fees and charges levied and collected by
highly urbanized and independent component cities shall accrue to
them and distributed in accordance with the provisions of this
Code.
The rates of taxes that the city may levy may exceed the
maximum rates allowed for the province or municipality by not
more than fifty percent (50%) except the rates of professional and
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
amusement taxes.
The taxes which the cities will impose are those taxes which the
province and the municipalities, combined, can impose. So the
cities can impose taxes that are authorized to provinces and
municipalities.
So the rates which the cities may impose is the same rates as the
municipalities and provinces, the maximum should not be over and
above 50% given to provinces and municipalities. Except the rates
of professional and amusement taxes, so for the professional tax it
shall remain at 300, and for the amusement tax the rate is to be
fixed at 30%
Section 140. Amusement Tax. -
(a) The province may levy an amusement tax to be collected from
the proprietors, lessees, or operators of theaters, cinemas, concert
halls, circuses, boxing stadia, and other places of amusement at a
rate of not more than thirty percent (30%) of the gross receipts
from admission fees.
(b) In the case of theaters or cinemas, the tax shall first be
deducted and withheld by their proprietors, lessees, or operators
and paid to the provincial treasurer before the gross receipts are
divided between said proprietors, lessees, or operators and the
distributors of the cinematographic films.
(c) The holding of operas, concerts, dramas, recitals, painting and
art exhibitions, flower shows, musical programs, literary and
oratorical presentations, except pop, rock, or similar concerts shall
be exempt from the payment of the tax hereon imposed.
(d) The sangguniang panlalawigan may prescribe the time,
manner, terms and conditions for the payment of tax. In case of
fraud or failure to pay the tax, the sangguniang panlalawigan may
impose such surcharges, interest and penalties as it may deem
appropriate.
(e) The proceeds from the amusement tax shall be shared equally
by the province and the municipality where such amusement
places are located.
So hindi na pwede iadjust yun. To the other taxes, take note,
those as much as 150% maximum rates.
Now, again, like the provinces and municipalities, these have to be
enacted by way of ordinance. So the cities will have to enact a
local revenue code for purposes of imposing the taxes allowed to
them under the local government code.
Then finally, you have the smallest the local government unit, the
barangays.
In the case of the barangays, being the smallest LGU, what
remains to them are the petty taxes fees and charges. So these
are already what we call salin-salin nalang na mabigay sa kanila.
Section 152. Scope of Taxing Powers. - The barangays may levy
taxes, fees, and charges, as provided in this Article, which shall
exclusively accrue to them:
(a) Taxes - On stores or retailers with fixed business
establishments with gross sales of receipts of the preceding
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
calendar year of Fifty thousand pesos (P50,000.00) or less, in the
case of cities and Thirty thousand pesos (P30,000.00) or less, in
the case of municipalities, at a rate not exceeding one percent
(1%) on such gross sales or receipts.
(b) Service Fees or Charges. - Barangays may collect reasonable
fees or charges for services rendered in connection with the
regulations or the use of barangay-owned properties or service
facilities such as palay, copra, or tobacco dryers.
Yung facilities nila within the barangay. They could charge a
service fee for the use of these facilities. Meron silang typical rural
setting, yung kanilang basketball court *stories about use sa court
in the day and afternoon for the copra dryers*
(c) Barangay Clearance. - No city or municipality may issue any
license or permit for any business or activity unless a clearance is
first obtained from the barangay where such business or activity is
located or conducted. For such clearance, the sangguniang
barangay may impose a reasonable fee. The application for
clearance shall be acted upon within seven (7) working days from
the filing thereof. In the event that the clearance is not issued
within the said period, the city or municipality may issue the said
license or permit.
(d) Other fees and Charges. - The barangay may levy reasonable
fees and charges:
(1) On commercial breeding of fighting cocks, cockfights and
cockpits;
Nagstory si dean about setting sa cockfights sa
barangay.
(2) On places of recreation which charge admission fees; and
(3) On billboards, signboards, neon signs, and outdoor
advertisements.
So if you noticed, the rest have been taken up already either by
the municipalities, cities, or provinces. So ito yung maiwain sa
barangay, yung petty taxes fees and charges.
Then you have the common revenue raising powers.
Section 153. Service Fees and Charges. - Local government units
may impose and collect such reasonable fees and charges for
services rendered.
Again, dapat nakalagay ito sa kanilang ordinance.
Then you could secure certified copy of your birth certificate from
the LCR- local civil registrar and other documents, part of the fees
to pay to secure a copy will be charged as service fees on top of
the profits and documents stamp tax for that document.
Hindi yung service fee na kasi nilakad niya, kaya ka may issuance
ng document. *stories about fixers sa NBI*
Section 154. Public Utility Charges. - Local government units may
fix the rates for the operation of public utilities owned, operated
and maintained by them within their jurisdiction.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So yung mga local government telephone system is one of the
those utilities that the LGC can impose charges. So meron silang
telephone system na tatawagan nila. *stories and selfie jokes*
Section 155. Toll Fees or Charges. - The sanggunian concerned
may prescribe the terms and conditions and fix the rates for the
imposition of toll fees or charges for the use of any public road,
pier, or wharf, waterway, bridge, ferry or telecommunication
system funded and constructed by the local government unit
concerned: Provided, That no such toll fees or charges shall be
collected from officers and enlisted men of the Armed Forces of
the Philippines and members of the Philippine National Police on
mission, post office personnel delivering mail, physically-
handicapped, and disabled citizens who are sixty-five (65) years or
older.
When public safety and welfare so requires, the sanggunian
concerned may discontinue the collection of the tolls, and
thereafter the said facility shall be free and open for public use.
Now this is different kaysa sa doon sa prohibition under 133.
Section 133. Common Limitations on the Taxing Powers of Local
Government Units. - Unless otherwise provided herein, the
exercise of the taxing powers of provinces, cities, municipalities,
and barangays shall not extend to the levy of the following:
(a) Income tax, except when levied on banks and other financial
institutions;
(b) Documentary stamp tax;
(c) Taxes on estates, inheritance, gifts, legacies and other
acquisitions mortis causa, except as otherwise provided herein;
(d) Customs duties, registration fees of vessel and wharfage on
wharves, tonnage dues, and all other kinds of customs fees,
charges and dues except wharfage on wharves constructed and
maintained by the local government unit concerned;
(e) Taxes, fees, and charges and other impositions upon goods
carried into or out of, or passing through, the territorial
jurisdictions of local government units in the guise of charges for
wharfage, tolls for bridges or otherwise, or other taxes, fees, or
charges in any form whatsoever upon such goods or merchandise;
(f) Taxes, fees or charges on agricultural and aquatic products
when sold by marginal farmers or fishermen;
(g) Taxes on business enterprises certified to by the Board of
Investments as pioneer or non-pioneer for a period of six (6) and
four (4) years, respectively from the date of registration;
(h) Excise taxes on articles enumerated under the national Internal
Revenue Code, as amended, and taxes, fees or charges on
petroleum products;
(i) Percentage or value-added tax (VAT) on sales, barters or
exchanges or similar transactions on goods or services except as
otherwise provided herein;
(j) Taxes on the gross receipts of transportation contractors and
persons engaged in the transportation of passengers or freight by
hire and common carriers by air, land or water, except as provided
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
in this Code;
(k) Taxes on premiums paid by way or reinsurance or
retrocession;
(l) Taxes, fees or charges for the registration of motor vehicles
and for the issuance of all kinds of licenses or permits for the
driving thereof, except tricycles;
(m) Taxes, fees, or other charges on Philippine products actually
exported, except as otherwise provided herein;
(n) Taxes, fees, or charges, on Countryside and Barangay Business
Enterprises and cooperatives duly registered under R.A. No. 6810
and Republic Act Numbered Sixty-nine hundred thirty-eight (R.A.
No. 6938) otherwise known as the "Cooperative Code of the
Philippines" respectively; and
(o) Taxes, fees or charges of any kind on the National
Government, its agencies and instrumentalities, and local
government units.
So that is not the one, iba itong toll fees. So these are the toll fees
for the use of a public road, pier, or wharf, waterway, bridge, ferry
or telecommunication system funded and constructed by the local
government unit. So they could impose the proper toll fees and
charges.
Now, exception: No such toll fees or charges shall be collected
from officers and enlisted men of the Armed Forces of the
Philippines and members of the Philippine National Police on
mission, post office personnel delivering mail, physically-
handicapped, and disabled citizens who are sixty-five (65) years or
older.
Again, all these have to embodied in an ordinance.
Then you have the community tax.
Now, the community tax is imposed by the cities or municipalities.
This is what we called residence tax then it was later called the
community tax, or popularly called the cedula or the poll tax.
So who are liable here? Individuals as well as juridical persons.
Section 157. Individuals Liable to Community Tax. - Every
inhabitant of the Philippines eighteen (18) years of age or over
who has been regularly employed on a wage or salary
basis for at least thirty (30) consecutive working days
during any calendar year, or
who is engaged in business or occupation, or
who owns real property with an aggregate assessed
value of One thousand pesos (P1,000.00) or more, or
who is required by law to file an income tax return
shall pay an annual additional tax of Five pesos (P5.00) and an
annual additional tax of One peso (P1.00) for every One thousand
pesos (P1,000.00) of income regardless of whether from business,
exercise of profession or from property which in no case shall
exceed Five thousand pesos (P5,000.00).
In the case of husband and wife, the additional tax herein imposed
shall be based upon the total property owned by them and the
total gross receipts or earnings derived by them.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So this pertains to inhabitants, not necessarily Filipino citizens. So
if you are a resident alien, you will be covered by this.
Basic tax: Five pesos (P5.00) and
Annual additional tax of One peso (P1.00) for every One thousand
pesos (P1,000.00) of income
So lets say youll make income for the year, 1M, that 1M, youll
pay one peso for every thousand on top of the 5 peso basic tax.
So:
Basic P5.00 + the add-on P1.00 for every P1,000
So if you have income, and you have real properties pagsama-
samahin niyo yung amount na yun, so P1.00 for every 1,000.
BUT the maximum amount should not exceed P5,000. So kahit
sumobra yan, pagcompute nila, max na yung 5T.
In the case of husband and wife, isa lang yung magbayad.
In the case of juridical entities, it applies to juridical persons
regardless how created.
Section 158. Juridical Persons Liable to Community Tax. - Every
corporation no matter how created or organized, whether
domestic or resident foreign, engaged in or doing business in the
Philippines shall pay an annual community tax of Five hundred
pesos (P500.00) and an annual additional tax, which, in no case,
shall exceed Ten thousand pesos (P10,000.00) in accordance with
the following schedule:
(1) For every Five thousand pesos (P5,000.00) worth of real
property in the Philippines owned by it during the preceding year
based on the valuation used for the payment of real property tax
under existing laws, found in the assessment rolls of the city or
municipality where the real property is situated - Two pesos
(P2.00); and
(2) For every Five thousand pesos (P5,000.00) of gross receipts or
earnings derived by it from its business in the Philippines during
the preceding year - Two pesos (P2.00).
The dividends received by a corporation from another corporation
however shall, for the purpose of the additional tax, be considered
as part of the gross receipts or earnings of said corporation.
So for corporations, no matter how created or organized, whether
domestic or resident foreign, engaged in or doing business in the
Philippines.
For the annual community tax, the basic is P500.00. Then the
additional tax is P2.00 for every P5,000:
worth of real property in the Philippines owned by it
during the preceding year based on the valuation used
for the payment of real property tax under existing laws;
including
gross receipts or earnings derived by it from its business
in the Philippines during the preceding year
But the maximum amount should not exceed P10,000.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Section 159. Exemptions. - The following are exempt from the
community tax:
(1) Diplomatic and consular representatives; and
(2) Transient visitors when their stay in the Philippines does not
exceed three (3) months.
Transient visitors non-resident foreigners visiting the country not
exceeding 3 months.
Section 160. Place of Payment. - The community tax shall be paid
in the place of residence of the individual, or in the place where
the principal office of the juridical entity is located.
So ngayon, January, the cedula shall be secure from the barangay.
So the barangay are being allocated of this cedula. So the
treasurers office will assign some booklets, receipts and the
assignment of ___ so that the residents could not go to city hall or
other collection offices of the LGU to secure the cedula. So sa
barangay lang, pwede na.
Section 161. Time for Payment; Penalties for Delinquency. -
(a) The community tax shall accrue on the first (1st) day of
January of each year which shall be paid not later than the last
day of February of each year. If a person reaches the age of
eighteen (18) years or otherwise loses the benefit of exemption on
or before the last day of June, he shall be liable for the community
tax on the day he reaches such age or upon the day the
exemption ends. However, if a person reaches the age of eighteen
(18) years or loses the benefit of exemption on or before the last
day of March, he shall have twenty (20) days to pay the
community tax without becoming delinquent.
Persons who come to reside in the Philippines or reach the age of
eighteen (18) years on or after the first (1st) day of July of any
year, or who cease to belong to an exempt class or after the same
date, shall not be subject to the community tax for that year.
The community tax shall accrue on the first (1st) day of January of
each year which shall be paid not later than the last day of
February of each year. So in the constitutional provision:
No person shall be imprisoned for non-payment of poll tax.
Ito yun. If you paid late, there is no corresponding offense of
which you will be held criminally liable. You will only be charged of
penalties and surcharges or interests for the late payment.
(b) Corporations established and organized on or before the last
day of June shall be liable for the community tax for that year.
But corporations established and organized on or before the last
day of March shall have twenty (20) days within which to pay the
community tax without becoming delinquent.
Corporations established and organized on or after the first day of
July shall not be subject to the community tax for that year.
If the tax is not paid within the time prescribed above, there shall
be added to the unpaid amount an interest of twenty-four percent
(24%) per annum from the due date until it is paid.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Corporations established and organized on or after the first day of
July shall not be subject to the community tax for that year.
However, the corporations will still secure the P500
(basic tax) EVEN IF you will secure that on December
because every year kasi naga-accrue on the first day of
January, so every year dapat may makolekta na.
So how long is your 2014 cedula is deemed acceptable, you will
deal with this in the last day which is answered in:
Section 163. Presentation of Community Tax Certificate On Certain
Occasions. - (c) The community tax certificate required in the two
preceding paragraphs shall be the one issued for the current year,
except for the period from January until the fifteenth (15th) of
April each year, in which case, the certificate issued for the
preceding year shall suffice.
So yung cedula mo for the previous year, in other words, will still
be good until 2015. So after that, may surcharges na.
If you are not required to get a cedula, at nagpupumilit ka sa
treasurers office na please issue me a cedula. Can you be issued
one? Yes.
Section 162. Community Tax Certificate. - A community tax
certificate shall be issued to every person or corporation upon
payment of the community tax. A community tax certificate may
also be issued to any person or corporation not subject to the
community tax upon payment of One peso (P1.00).
*gitagalog lang ni dean ang provision. *
But ngayon the cedula is not that useful anymore, when we go to
163, the presentation of the cedula is no longer allowed under out
notarial practice rule. It is now a valid ID for purposes of
notarization, the valid IDs should be presented, not anymore the
cedula because a person could have 2 or more cedula, and the
cedula is not a valid document for identification.
Section 163. Presentation of Community Tax Certificate On Certain
Occasions. -
(a) When an individual subject to the community tax
acknowledges any document before a notary public
So hindi na yan pwede.
takes the oath of office upon election or appointment to
any position in the government service;
receives any license, certificate. or permit from any
public authority;
pays any tax or free;
receives any money from any public fund;
transacts other official business; or
receives any salary or wage from any person or
corporation with whom such transaction is made or
business done or from whom any salary or wage is
received to require such individual to exhibit the
community tax certificate.
The presentation of community tax certificate shall not be required
in connection with the registration of a voter.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
The presentation of community tax certificate shall not be
required in connection with the registration of a voter.
The Board of election inspectors, the poll officials, they
are not allowed or required or they are prohibited asking
for the presentation of the cedula for registration for a
voters ID.
However, there is nothing to the cedula which could connect the
holder of that cedula to the person before you, kasi paano mo ma-
compare ang cedula at yung tao? The cedula do not have your
picture, it may have your signature, residence, weight or height, it
cannot make a comparison that the holder of the cedula is the
person before me, unless there is an ID na may picture at pirma.
This has been the way the identity has been established before.
Section 164. Printing of Community Tax Certificates and
Distribution of Proceeds. -
(a) The Bureau of Internal Revenue shall cause the printing of
community tax certificates and distribute the same to the cities
and municipalities through the city and municipal treasurers in
accordance with prescribed regulations.
The proceeds of the tax shall accrue to the general funds of the
cities, municipalities and barangays except a portion thereof which
shall accrue to the general fund of the national government to
cover the actual cost of printing and distribution of the forms and
other related expenses. The city or municipal treasurer concerned
shall remit to the national treasurer the said share of the national
government in the proceeds of the tax within ten (10) days after
the end of each quarter.
(b) The city or municipal treasurer shall deputize the barangay
treasurer to collect the community tax in their respective
jurisdictions: Provided, however, That said barangay treasurer
shall be bonded in accordance with existing laws.
(c) The proceeds of the community tax actually and directly
collected by the city or municipal treasurer shall accrue entirely to
the general fund of the city or municipality concerned. However,
proceeds of the community tax collected through the barangay
treasurers shall be apportioned as follows:
(1) Fifty percent (50%) shall accrue to the general fund of the city
or municipality concerned; and
(2) Fifty percent (50%) shall accrue to the barangay where the tax
is collected.
Now, to those filing income tax returns, sa annual returns, meron
sa baba, you will be asked to disclose your residence certificate
number, date and place issued and the amount you have paid for
the cedula. Maghi-hit na yan sa BIR, kasi the total amount you
paid is more or less ahead with the BIR, WON the income tax
return will disclose the more or less approximate the amount you
have paid for your cedula.
So the BIR prints the CTC and distributes them to the cities and
municipalities through the local treasurers.
Now we have the tax collection.
Section 165. Tax Period and Manner of Payment. - Unless
otherwise provided in this Code, the tax period of all local taxes,
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
fees and charges shall be the calendar year. Such taxes, fees
and charges may be paid in quarterly installments.
In the NIRC, the taxpayer may either use the calendar or fiscal
period. Individuals, annual lang. corporations, either calendar or
fiscal lang.
In the local tax, walang option, everybody whether individual or
corporate, will be subject or use the calendar year as its tax year.
But these taxes, fees and charges may be paid in quarterly
installments. Now, when you pay the local tax, the tax base will be
based on your gross receipts. Now, if you are paying the business
tax for 2015, paano nila maba-base yung business tax mo sa
2015, kung nagsisimula ka na ng 2015 because the business tax
or local taxes shall be paid on or before January 20 of each year or
you may pay it in quarterly installments. Now, the tax base is
reckoned on the previous calendar years gross receipts. So 2015
business tax, idetermine nila ano yung gross receipts mo sa 2014
and that will be the tax base for the collection of the business tax
or local taxes of 2015. However, you are given the option to pay it
quarterly.
Section 166. Accrual of Tax. - Unless otherwise provided in this
Code, all local taxes, fees, and charges shall accrue on the first
(1st) day of January of each year. However, new taxes, fees or
charges, or changes in the rates thereof, shall accrue on the first
(1st) day of the quarter next following the effectivity of the
ordinance imposing such new levies or rates.
So for new taxes, that will be effective during the year, then the
accrual will take effect from the 1st day of the quarter next
following the effectivity of the ordinance imposing such new levies
or rates.
So if the ordinance imposing the new rate becomes effective on
August of 2014, when will that tax accrue?
So the august falls on the 3 rd quarter, so the accrual will
be on the 1st day of the quarter next following the
effectivity so beginning OCTOBER 1, thats the time the
new tax will accrue. In other words, when the effectivity
comes earlier, the accrual comes later; and that is the
time you collect the tax under the ordinance. It does not
follow that once it becomes effective sisingilin na. There
is a reckoning of the accrual.
Section 167. Time of Payment. - Unless otherwise provided in this
Code, all local taxes, fees, and charges shall be paid within the
first twenty (20) days of January or of each subsequent quarter,
as the case may be. The sanggunian concerned may, for a
justifiable reason or cause, extend the time for payment of such
taxes, fees, or charges without surcharges or penalties, but only
for a period not exceeding six (6) months.
So the first quarterly installment will be done on or before January
20, the next will be on or before April 20, and so on. Again, all
these have to be embodied in an ordinance. Thats why the tax
code of the LGU have to be complete, it should not only have the
taxes authorized, but also the manner of collection, penalties,
because the LGC imposes a range or interest for penalties that is
allowed because the LGU through the sanggunian will now fix ano
yung interest rate or charges in case of default or late payment.
Section 168. Surcharges and Penalties on Unpaid Taxes, Fees, or
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Charges. - The sanggunian may impose a surcharge not exceeding
twenty-five (25%) of the amount of taxes, fees or charges not
paid on time and an interest at the rate not exceeding two percent
(2%) per month of the unpaid taxes, fees or charges including
surcharges, until such amount is fully paid but in no case shall the
total thirty-six (36%) months.
Section 169. Interests on Other Unpaid Revenues. - Where the
amount of any other revenue due a local government unit, except
voluntary contributions or donations, is not paid on the date fixed
in the ordinance, or in the contract, expressed or implied, or upon
the occurrence of the event which has given rise to its collection,
there shall be collected as part of that amount an interest thereon
at the rate not exceeding two percent (2%) per month from the
date it is due until it is paid, but in no case shall the total interest
on the unpaid amount or a portion thereof exceed thirty-six (36)
months.
Again, kailangan to ng ordinance to fix the interest which should
not exceed 2%/month.
Section 170. Collection of Local Revenue by Treasurer. - All local
taxes, fees, and charges shall be collected by the provincial, city,
municipal, or barangay treasurer, or their duly authorized
deputies.
The provincial, city or municipal treasurer may designate the
barangay treasurer as his deputy to collect local taxes, fees, or
charges. In case a bond is required for the purpose, the provincial,
city or municipal government shall pay the premiums thereon in
addition to the premiums of bond that may be required under this
Code.
Now, in the principles, that the local taxes fees and charges
cannot be lent to any private person, so sino yung authorized
collector? Thats in 170. So in every local government unit, there is
a treasurer city, municipal and provincial treasurer, also
barangay treasurer. Now these treasurers, the city municipal or
provincial treasurers may authorize or assign the barangay
treasurer to collect local taxes fees and charges. Davao is
composed of different political districts, so every collection district
is composed of collecting units.
Section 171. Examination of Books of Accounts and Pertinent
Records of Businessmen by Local Treasurer. - The provincial, city,
municipal or barangay treasurer may, by himself or through any of
his deputies duly authorized in writing, examine the books,
accounts, and other pertinent records of any person, partnership,
corporation, or association subject to local taxes, fees and charges
in order to ascertain. assess, and collect the correct amount of the
tax, fee, or charge. Such examination shall be made during regular
business hours, only once for every tax period, and shall be
certified to by the examining official. Such certificate shall be made
of record in the books of accounts of the taxpayer examined.
In case the examination herein authorized is made by a duly
authorized deputy of the local treasurer, the written authority of
the deputy concerned shall specifically state the name, address,
and business of the taxpayer whose books, accounts, and
pertinent records are to be examined, the date and place of such
examination and the procedure to be followed in conducting the
same.
For this purpose, the records of the revenue district office of the
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Bureau of Internal Revenue shall be made available to the local
treasurer, his deputy or duly authorized representative.
So take note on the comparison of this kind of work with the
Commissioner. It is part of the power of the Commissioner or with
the BIR, for purposes of assessment, examine books of accounts
or records of the business for those local taxpayers within the
LGU.
Now the local counterpart is the local treasurer, yan din trabaho
niya to examine.
January 29, 2015
Answer ni Dean sa tanong ni Carizza tungkol sa cedula.
Section 161. Time for Payment; Penalties for Delinquency. -
(a) The community tax shall accrue on the first (1st) day
of January of each year which shall be paid not later
than the last day of February of each year.
So after February may interest and surcharges na.
REMEDIES FOR COLLECTION OF THE LOCAL TAXES/
LOCAL REVENUES
As we have learned in the NIRC, the remedies of the government
to collect the tax are:
1. ADMINISTRATIVE
Levy real property
Distraint personal property including
Garnishment of your back accounts
2. JUDICIAL
By way of filing a civil action to collect the tax
when the assessment has become final and
executory
By way of filing a criminal action
In local taxation, you also have the same remedies but judicial
action is done usually through a civil action to collect the unpaid
local tax.
Under Sec. 173, there is also what we call the local
governments lien. Remember there is also an equivalent tax
lien under the NIRC.
What is this local tax lien or local governments lien?
Section 173. Local Government's Lien. - Local taxes, fees,
charges and other revenues constitute a lien, superior to all liens,
charges or encumbrances in favor of any person, enforceable by
appropriate administrative or judicial action, not only upon any
property or rights therein which may be subject to the lien but also
upon property used in business, occupation, practice of profession
or calling, or exercise of privilege with respect to which the lien is
imposed. The lien may only be extinguished upon full payment of
the delinquent local taxes fees and charges including related
surcharges and interest.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
As we have learned in the NIRC, the tax lien operates as a legal
claim of the government for taxes against the property of the
taxpayer by reason of a tax delinquency and that holds true also in
the case of local tax. When there is a liability for the local tax,
there also arises that lien, claim, legal charge which the local
government may pursue against the properties of the local
taxpayer for the payment of their delinquent or unpaid local tax.
What is peculiar in the case of the local governments lien is that
the lien is superior to all other liens, charges or encumbrances
wherein the properties used in business, occupation, practice of
profession, calling or exercise of privilege then the lien (claim of
the government) insofar as those properties used in business,
occupation, practice of profession, calling or exercise of privilege
once the liability arises becomes superior to all other liens or
claims or other charges or encumbrances.
Unlike in the NIRC, the operation of the lien is effective pag
walang nakaunang encumbrances or there is no person who made
claim ahead of the government because in the NIRC once there is
already a person ahead (meron nang mortgagee) or there is
already a superior encumbrance then the claim of the government
or internal revenue tax becomes inferior.
The governments lien becomes inferior but not in local tax insofar
as those properties which are used in business, occupation or
practice of profession. Now the only way that lien will be
extinguished is the payment of a delinquent local taxes. That is
also the same mode of extinguishing in the NIRC. Not unless
bayaran mo then lien also will be extinguished.
Section 174. Civil Remedies. - The civil remedies for the
collection of local taxes, fees, or charges, and related surcharges
and interest resulting from delinquency shall be:
(a) By administrative action thru distraint of goods,
chattels, or effects, and other personal property of
whatever character, including stocks and other securities,
debts, credits, bank accounts, and interest in and rights
to personal property, and by levy upon real property and
interest in or rights to real property;
(b) By judicial action.
Either of these remedies or all may be pursued
concurrently or simultaneously at the discretion of the
local government unit concerned.
In the pursuit of the remedies in the NIRC, we brought that
question when the government now pursues an administrative
remedy to collect the tax
Is the government now precluded from resorting from other
remedies?
A: In the NIRC, the law says that the government is not
precluded and that is also true in the case of local taxation. Last
par. of Sec. 174
Section 175. Distraint of Personal Property. - The remedy by
distraint shall proceed as follows:
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
(a) Seizure - Upon failure of the person owing any local
tax, fee, or charge to pay the same at the time required,
the local treasurer or his deputy may, upon written
notice, seize or confiscate any personal property
belonging to that person or any personal property
subject to the lien in sufficient quantity to satisfy the tax,
fee, or charge in question, together with any increment
thereto incident to delinquency and the expenses of
seizure. In such case, the local treasurer or his deputy
shall issue a duly authenticated certificate based upon
the records of his office showing the fact of delinquency
and the amounts of the tax, fee, or charge and penalty
due. Such certificate shall serve as sufficient warrant for
the distraint of personal property aforementioned,
subject to the taxpayer's right to claim exemption under
the provisions of existing laws. Distrained personal
property shall be sold at public auction in the manner
hereon provided for.
(b) Accounting of distrained goods. - The officer
executing the distraint shall make or cause to be made
an account of the goods, chattels or effects distrained, a
copy of which signed by himself shall be left either with
the owner or person from whose possession the goods,
chattels or effects are taken, or at the dwelling or place
or business of that person and with someone of suitable
age and discretion, to which list shall be added a
statement of the sum demanded and a note of the time
and place of sale.
(c) Publication - The officer shall forthwith cause a
notification to be exhibited in not less than three (3)
public and conspicuous places in the territory of the local
government unit where the distraint is made, specifying
the time and place of sale, and the articles distrained.
The time of sale shall not be less than twenty (20) days
after the notice to the owner or possessor of the
property as above specified and the publication or
posting of the notice. One place for the posting of the
notice shall be at the office of the chief executive of the
local government unit in which the property is distrained.
(d) Release of distrained property upon payment prior to
sale - If at any time prior to the consummation of the
sale, all the proper charges are paid to the officer
conducting the sale, the goods or effects distrained shall
be restored to the owner.
(e) Procedure of sale - At the time and place fixed in the
notice, the officer conducting the sale shall sell the goods
or effects so distrained at public auction to the highest
bidder for cash. Within five (5) days after the sale, the
local treasurer shall make a report of the proceedings in
writing to the local chief executive concerned.
Should the property distrained be not disposed of within
one hundred and twenty (120) days from the date of
distraint, the same shall be considered as sold to the
local government unit concerned for the amount of the
assessment made thereon by the Committee on
Appraisal and to the extent of the same amount, the tax
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
delinquencies shall be cancelled.
Said Committee on Appraisal shall be composed of the
city or municipal treasurer as chairman, with a
representative of the Commission on Audit and the city
or municipal assessor as members.
(f) Disposition of proceeds - The proceeds of the sale
shall be applied to satisfy the tax, including the
surcharges, interest, and other penalties incident to
delinquency, and the expenses of the distraint and sale.
The balance over and above what is required to pay the
entire claim shall be returned to the owner of the
property sold. The expenses chargeable upon the seizure
and sale shall embrace only the actual expenses of
seizure and preservation of the property pending the
sale, and no charge shall be imposed for the services of
the local officer or his deputy. Where the proceeds of the
sale are insufficient to satisfy the claim, other property
may, in like manner, be distrained until the full amount
due, including all expenses, is collected.
How the proceedings for distraint are undertaken Sec. 175
Actually, it is the same as the NIRC. There is that seizure of
personal property and the auction sale then sold to the highest
bidder. Pagkulang further distraint.
Section 176. Levy on Real Property. - After the expiration of the
time required to pay the delinquent tax, fee, or charge, real
property may be levied on before, simultaneously, or after the
distraint of personal property belonging to the delinquent
taxpayer. To this end, the provincial, city or municipal treasurer,
as the case may be, shall prepare a duly authenticated certificate
showing the name of the taxpayer and the amount of the tax, fee,
or charge, and penalty due from him. Said certificate shall operate
with the force of a legal execution throughout the Philippines. Levy
shall be effected by writing upon said certificate the description of
the property upon which levy is made. At the same time, written
notice of the levy shall be mailed to or served upon the assessor
and the Register of Deeds of the province or city where the
property is located who shall annotate the levy on the tax
declaration and certificate of title of the property, respectively, and
the delinquent taxpayer or, if he be absent from the Philippines, to
his agent or the manager of the business in respect to which the
liability arose, or if there be none, to the occupant of the property
in question.
In case the levy on real property is not issued before or
simultaneously with the warrant of distraint on personal property,
and the personal property of the taxpayer is not sufficient to
satisfy his delinquency, the provincial, city or municipal treasurer,
as the case may be, shall within thirty (30) days after execution of
the distraint, proceed with the levy on the taxpayer's real property.
A report on any levy shall, within ten (10) days after receipt of the
warrant, be submitted by the levying officer to the sanggunian
concerned.
The remedy of the levy of the real properties or immovables is
also the same as the NIRC. You go to the ROD (Register of Deeds)
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
to annotate the claim then there is the publication of the auction
sale. The property will be sold to the highest bidder then, there is
what we call the sale will be annotated in the ROD for purposes of
counting the redemption period. There is no redemption then final
deed to the purchaser. If there is redemption, the property will be
returned to the taxpayer. Kung kulang further levy.
So you have the proceedings in Sec. 178 Advertisement and Sale
Section 178. Advertisement and Sale. - Within thirty (30) days
after the levy, the local treasurer shall proceed to publicly
advertise for sale or auction the property or a usable portion
thereof as may be necessary to satisfy the claim and cost of sale;
and such advertisement shall cover a period of at least thirty (30)
days. It shall be effected by posting a notice at the main entrance
of the municipal building or city hall, and in a public and
conspicuous place in the barangay where the real property is
located, and by publication once a week for three (3) weeks in a
newspaper of general circulation in the province, city or
municipality where the property is located. The advertisement
shall contain the amount of taxes, fees or charges, and penalties
due thereon, and the time and place of sale, the name of the
taxpayer against whom the taxes, fees, or charges are levied, and
a short description of the property to be sold. At any time before
the date fixed for the sale, the taxpayer may stay they
proceedings by paying the taxes, fees, charges, penalties and
interests. If he fails to do so, the sale shall proceed and shall be
held either at the main entrance of the provincial, city or municipal
building, or on the property to be sold, or at any other place as
determined by the local treasurer conducting the sale and
specified in the notice of sale.
Within thirty (30) days after the sale, the local treasurer or his
deputy shall make a report of the sale to the sanggunian
concerned, and which shall form part of his records. After
consultation with the sanggunian, the local treasurer shall make
and deliver to the purchaser a certificate of sale, showing the
proceeding of the sale, describing the property sold, stating the
name of the purchaser and setting out the exact amount of all
taxes, fees, charges, and related surcharges, interests, or
penalties: Provided, however, That any excess in the proceeds of
the sale over the claim and cost of sales shall be turned over to
the owner of the property.
The local treasurer may, by ordinance duly approved, advance an
amount sufficient to defray the costs of collection by means of the
remedies provided for in this Title, including the preservation or
transportation in case of personal property, and the advertisement
and subsequent sale, in cases of personal and real property
including improvements thereon.
Section 179. Redemption of Property Sold. - Within one (1) year
from the date of sale, the delinquent taxpayer or his
representative shall have the right to redeem the property upon
payment to the local treasurer of the total amount of taxes, fees,
or charges, and related surcharges, interests or penalties from the
date of delinquency to the date of sale, plus interest of not more
than two percent (2%) per month on the purchase price from the
date of purchase to the date of redemption. Such payment shall
invalidate the certificate of sale issued to the purchaser and the
owner shall be entitled to a certificate of redemption from the
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
provincial, city or municipal treasurer or his deputy.
The provincial, city or municipal treasurer or his deputy, upon
surrender by the purchaser of the certificate of sale previously
issued to him, shall forthwith return to the latter the entire
purchase price paid by him plus the interest of not more than two
percent (2%) per month herein provided for, the portion of the
cost of sale and other legitimate expenses incurred by him, and
said property thereafter shall be free from the lien of such taxes,
fees, or charges, related surcharges, interests, and penalties.
The owner shall not, however, be deprived of the possession of
said property and shall be entitled to the rentals and other income
thereof until the expiration of the time allowed for its redemption.
Section 180. Final Deed to Purchaser. - In case the taxpayer fails
to redeem the property as provided herein, the local treasurer
shall execute a deed conveying to the purchaser so much of the
property as has been sold, free from liens of any taxes, fees,
charges, related surcharges, interests, and penalties. The deed
shall succinctly recite all the proceedings upon which the validity of
the sale depends.
Section 181. Purchase of Property By the Local Government
Units for Want of Bidder. - In case there is no bidder for the real
property advertised for sale as provided herein, or if the highest
bid is for an amount insufficient to pay the taxes, fees, or charges,
related surcharges, interests, penalties and costs, the local
treasurer conducting the sale shall purchase the property in behalf
of the local government unit concerned to satisfy the claim and
within two (2) days thereafter shall make a report of his
proceedings which shall be reflected upon the records of his office.
It shall be the duty of the Registrar of Deeds concerned upon
registration with his office of any such declaration of forfeiture to
transfer the title of the forfeited property to the local government
unit concerned without the necessity of an order from a competent
court.
Within one (1) year from the date of such forfeiture, the taxpayer
or any of his representative, may redeem the property by paying
to the local treasurer the full amount of the taxes, fees, charges,
and related surcharges, interests, or penalties, and the costs of
sale. If the property is not redeemed as provided herein, the
ownership thereof shall be fully vested on the local government
unit concerned.
Sec. 181 The government may participate in that purchase of
deed.
Section 182. Resale of Real Estate Taken for Taxes, Fees, or
Charges. - The sanggunian concerned may, by ordinance duly
approved, and upon notice of not less than twenty (20) days, sell
and dispose of the real property acquired under the preceding
section at public auction. The proceeds of the sale shall accrue to
the general fund of the local government unit concerned.
Again, the remedies of collection while they are there under the
LGC but they should also be embodied in the ordinance. The
government could not pursue the remedies for collection pag
walang ordinance. The LGC is not the law which authorizes them,
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
it is the law which defines the limit of the power. When the LGU
enacts through the Sanggunian a local revenue code or a local tax
code, all of this have to be embodied in the ordinance. The taxes
authorized, the way they will be collected, the manner and type of
payment, the process of assessment, the mode of collection, the
remedies (etc.)
Sec. 182 The remedy of re-selling
Section 183. Collection of Delinquent Taxes, Fees, Charges or
other Revenues through Judicial Action. - The local government
unit concerned may enforce the collection of delinquent taxes,
fees, charges or other revenues by civil action in any court of
competent jurisdiction. The civil action shall be filed by the local
treasurer within the period prescribed in Section 194 of this Code.
The known(?) judicial action is by way of civil action before the
regular courts. So to collect the tax by way of judicial action, you
file a collection case and depending on the jurisdictional amounts
(file that either to the MTC or RTC).
Then who is the local LGU officer authorized? The local treasurer.
Section 184. Further Distraint or Levy. - The remedies by
distraint and levy may be repeated if necessary until the full
amount due, including all expenses, is collected.
Section 185. Personal Property Exempt from Distraint or Levy. -
The following property shall be exempt from distraint and the levy,
attachment or execution thereof for delinquency in the payment of
any local tax, fee or charge, including the related surcharge and
interest:
(a) Tools and implements necessarily used by the
delinquent taxpayer in his trade or employment;
(b) One (1) horse, cow, carabao, or other beast of
burden, such as the delinquent taxpayer may select, and
necessarily used by him in his ordinary occupation;
(c) His necessary clothing, and that of all his family;
(d) Household furniture and utensils necessary for
housekeeping and used for that purpose by the
delinquent taxpayer, such as he may select, of a value
not exceeding Ten thousand pesos (P10,000.00);
(e) Provisions, including crops, actually provided for
individual or family use sufficient for four (4) months;
(f) The professional libraries of doctors, engineers,
lawyers and judges;
(g) One fishing boat and net, not exceeding the total
value of Ten thousand pesos (P10,000.00), by the lawful
use of which a fisherman earns his livelihood; and
(h) Any material or article forming part of a house or
improvement of any real property.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
One aspect in the NIRC, we encounter the principle of non-
restraint or injunction is not an available remedy to collect the
internal revenue tax thus far we have not encountered that
provision.
Is that remedy or relief on the part of the government available in
the case of the LGU?
A: As a rule, when such provision is not found in the LGC it does
not follow that injunction will not lie because what the local
government will do is the remedies under our regular rules. You
have under the Rules of Court, the relief for preliminary injunction
then that could be availed of. It does not mean that injunction is
not available, it is still available but it will follow the requirements
under the Rules of Court.
In the NIRC, klaro yun. The general rule that the collection of
internal revenue tax cannot be enjoined except under meritorious
cases. In the LGC, walang ganun counterpart but still you could
avail of the injunction under the Rules of Court.
Section 186. Power To Levy Other Taxes, Fees or Charges. -
Local government units may exercise the power to levy taxes, fees
or charges on any base or subject not otherwise specifically
enumerated herein or taxed under the provisions of the National
Internal Revenue Code, as amended, or other applicable laws:
Provided, That the taxes, fees, or charges shall not be unjust,
excessive, oppressive, confiscatory or contrary to declared national
policy: Provided, further, That the ordinance levying such taxes,
fees or charges shall not be enacted without any prior public
hearing conducted for the purpose.
Sec 186 posed a question on whether the LGU could still impose
taxes, fees or charges outside of those provided under the LGC.
Take note earlier we took up what are the taxes allowed to
provinces. So nakaenumerate doon under the LGC. Now could the
LGU still enact other taxes, fees or charges outside of those earlier
provided? That is answered under sec 186 Principle of
Residual Power of Taxation.
In other words, there is a residual power of taxation from the
LGUs. Meaning, they could still enact through the Sanggunian
(Ordinance) to enact other taxes, fees or charges.
Ano yung requirement?
1. For as long as they are not otherwise specifically
enumerated herein or taxed under the NIRC or other
applicable laws;
2. The taxes, fees or charges shall not be unjust, excessive,
oppressive, confiscatory or contrary to declared policy;
and
3. The requirement of a prior public hearing.
These requirements must be complied for purposes of that
exercise of residual tax power. All ordinances usually would pass
through a public hearing in the same way as when you also enact
national laws whether it is a revenue or a non-revenue measure. It
will always pass a public hearing.
(Dean talked about the passage of a bill in the Congress *review
your Consti* and its counterpart in the Local Government same
process )
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Note: In case of a veto (local chief executive), the governor is
given 15 days to communicate and the mayor is given 10 days.
The Sanggunian may override the veto by 2/3 vote. There is also
inaction then, it still approved after the period of 30days (national
government), 15 days (governor) and 10 days (mayor).
When will the ordinance take effect? 10days AFTER ITS
PUBLICATION as the case may be.
CHAPTER III
Local Legislation
Section 48. Local Legislative Power. - Local legislative power shall
be exercised by the sangguniang panlalawigan for the province;
the sangguniang panlungsod for the city; the sangguniang bayan
for the municipality; and the sangguniang barangay for the
barangay.
Section 49. Presiding Officer. -
(a) The vice-governor shall be the presiding officer of the
sangguniang panlalawigan; the city vice-mayor, of the
sangguniang panlungsod; the municipal vice-mayor, of
the sangguniang bayan; and the punong barangay, of
Section 51. Full Disclosure of Financial and Business Interests of
the sangguniang barangay. The presiding officer shall
Sanggunian Members. -
vote only to break a tie.
(b) In the event of the inability of the regular presiding
officer to preside at a sanggunian session, the members
present and constituting a quorum shall elect from
among themselves a temporary presiding officer. He
shall certify within ten (10) days from the passage of
ordinances enacted and resolutions adopted by the
sanggunian in the session over which he temporarily
presided.
Section 50. Internal Rules of Procedure. -
(a) On the first regular session following the election of
its members and within ninety (90) days thereafter, the
sanggunian concerned shall adopt or update its existing
rules of procedure.
(b) The rules of procedure shall provided for the
following:
(1) The organization of the sanggunian and the
election of its officers as well as the creation of
standing committees which shall include, but
shall not be limited to, the committees on
appropriations, women and family, human
rights, youth and sports development,
environmental protection, and cooperatives;
the general jurisdiction of each committee; and
the election of the chairman and members of
each committee;
(2) The order and calendar of business for each
session;
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(3) The legislative process;
(4) The parliamentary procedures which include
the conduct of members during sessions;
(5) The discipline of members for disorderly
behavior and absences without justifiable cause
for four (4) consecutive sessions, for which
they may be censured, reprimanded, or
excluded from the session, suspended for not
more than sixty (60) days, or expelled:
Provided, That the penalty of suspension or
expulsion shall require the concurrence of at
least two-thirds (2/3) vote of all the sanggunian
members: Provided, further, That a member
convicted by final judgment to imprisonment of
at least one (1) year for any crime involving
moral turpitude shall be automatically expelled
from the sanggunian; and
(6) Such other rules as the sanggunian may
adopt.lawphil
(a) Every sanggunian member shall, upon assumption to
office, make a full disclosure of his business and financial
interests, or professional relationship or any relation by
affinity or consanguinity within the fourth civil degree,
which he may have with any person, firm, or entity
affected by any ordinance or resolution under
consideration by the sanggunian of which he is a
member, which relationship may result in conflict of
interest. Such relationship shall include:
(1) Ownership of stock or capital, or
investment, in the entity or firm to which the
ordinance or resolution may apply; and
(2) Contracts or agreements with any person or
entity which the ordinance or resolution under
consideration may affect.
In the absence of a specific constitutional or
statutory provision applicable to this situation,
"conflict of interest" refers in general to one
where it may be reasonably deduced that a
member of a sanggunian may not act in the
public interest due to some private, pecuniary,
or other personal considerations that may tend
to affect his judgment to the prejudice of the
service or the public.
(b) The disclosure required under this Act shall be made
in writing and submitted to the secretary of the
sanggunian or the secretary of the committee of which
he is a member. The disclosure shall, in all cases, form
part of the record of the proceedings and shall be made
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
in the following manner:
(1) Disclosure shall be made before the
member participates in the deliberations on the
ordinance or resolution under consideration:
Provided, That, if the member did not
participate during the deliberations, the
disclosure shall be made before voting on the
ordinance or resolution on second and third
readings; and
(2) Disclosure shall be made when a member
takes a position or makes a privilege speech on
a matter that may affect the business interest,
financial connection, or professional
relationship described herein.
Section 52. Sessions. -
(a) On the first day of the session immediately following
the election of its members, the sanggunian shall, by
resolution, fix the day, time, and place of its regular
sessions. The minimum numbers of regular sessions shall
be once a week for the sangguniang panlalawigan,
sangguniang panlungsod, and sangguniang bayan, and
twice a month for the sangguniang barangay.
(b) When public interest so demands, special sessions
may be called by the local chief executive or by a
majority of the members of the sanggunian.
(c) All sanggunian sessions shall be open to the public
unless a closed-door session is ordered by an affirmative
vote of a majority of the members present, there being a
quorum, in the public interest or for reasons of security,
decency, or morality. No two (2) sessions, regular or
special, may be held in a single day.
(d) In the case of special sessions of the sanggunian, a
written notice to the members shall be served personally
at the member's usual place of residence at least twenty-
four (24) hours before the special session is held.
Unless otherwise concurred in by two-thirds (2/3) vote of
the sanggunian members present, there being a quorum,
no other matters may be considered at a special session
except those stated in the notice.
(e) Each sanggunian shall keep a journal and record of
its proceedings which may be published upon resolution
of the sanggunian concerned.
Section 53. Quorum. -
(a) A majority of all the members of the sanggunian who
have been elected and qualified shall constitute a
quorum to transact official business. Should a question of
quorum be raised during a session, the presiding officer
shall immediately proceed to call the roll of the members
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
and thereafter announce the results.
(b) Where there is no quorum, the presiding officer may
declare a recess until such time as a quorum is
constituted, or a majority of the members present may
adjourn from day to day and may compel the immediate
attendance of any member absent without justifiable
cause by designating a member of the sanggunian to be
assisted by a member or members of the police force
assigned in the territorial jurisdiction of the local
government unit concerned, to arrest the absent
member and present him at the session.
(c) If there is still no quorum despite the enforcement of
the immediately preceding subsection, no business shall
be transacted. The presiding officer, upon proper motion
duly approved by the members present, shall then
declare the session adjourned for lack of quorum.
Section 54. Approval of Ordinances. -
(a) Every ordinance enacted by the sangguniang
panlalawigan, sangguniang panlungsod, or sangguniang
bayan shall be presented to the provincial governor or
city or municipal mayor, as the case may be. If the local
chief executive concerned approves the same, he shall
affix his signature on each and every page thereof;
otherwise, he shall veto it and return the same with his
objections to the sanggunian, which may proceed to
reconsider the same. The sanggunian concerned may
override the veto of the local chief executive by two-
thirds (2/3) vote of all its members, thereby making the
ordinance or resolution effective for all legal intents and
purposes.
(b) The veto shall be communicated by the local chief
executive concerned to the sanggunian within fifteen
(15) days in the case of a province, and ten (10) days in
the case of a city or a municipality; otherwise, the
ordinance shall be deemed approved as if he had signed
it.
(c) Ordinances enacted by the sangguniang barangay
shall, upon approval by the majority of all its members,
be signed by the punong barangay.
Section 55. Veto Power of the Local Chief Executive. -
(a) The local chief executive may veto any ordinance of
the sanggunian panlalawigan, sangguniang panlungsod,
or sanggunian bayan on the ground that it is ultra vires
or prejudicial to the public welfare, stating his reasons
therefor in writing.
(b) The local chief executive, except the punong
barangay, shall have the power to veto any particular
item or items of an appropriations ordinance, an
ordinance or resolution adopting a local development
plan and public investment program, or an ordinance
directing the payment of money or creating liability. In
such a case, the veto shall not affect the item or items
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
which are not objected to. The vetoed item or items shall
not take effect unless the sanggunian overrides the veto
in the manner herein provided; otherwise, the item or
items in the appropriations ordinance of the previous
year corresponding to those vetoed, if any, shall be
deemed reenacted.
(c) The local chief executive may veto an ordinance or
resolution only once. The sanggunian may override the
veto of the local chief executive concerned by two-thirds
(2/3) vote of all its members, thereby making the
ordinance effective even without the approval of the
local chief executive concerned.
Section 56. Review of Component City and Municipal Ordinances
or Resolutions by the Sangguniang Panlalawigan.
(a) Within three (3) days after approval, the secretary to
the sanggunian panlungsod or sangguniang bayan shall
forward to the sangguniang panlalawigan for review,
copies of approved ordinances and the resolutions
approving the local development plans and public
investment programs formulated by the local
development councils.
(b) Within thirty (30) days after the receipt of copies of
such ordinances and resolutions, the sangguniang
panlalawigan shall examine the documents or transmit
them to the provincial attorney, or if there be none, to
the provincial prosecutor for prompt examination. The
provincial attorney or provincial prosecutor shall, within a
period of ten (10) days from receipt of the documents,
inform the sangguniang panlalawigan in writing of his
comments or recommendations, which may be
considered by the sangguniang panlalawigan in making
its decision.
(c) If the sangguniang panlalawigan finds that such an
ordinance or resolution is beyond the power conferred
upon the sangguniang panlungsod or sangguniang bayan
concerned, it shall declare such ordinance or resolution
invalid in whole or in part. The sangguniang
panlalawigan shall enter its action in the minutes and
shall advise the corresponding city or municipal
authorities of the action it has taken.
(d) If no action has been taken by the sangguniang
panlalawigan within thirty (30) days after submission of
such an ordinance or resolution, the same shall be
presumed consistent with law and therefore valid.
Section 57. Review of Barangay Ordinances by the Sangguniang
Panlungsod or Sangguniang Bayan. -
(a) Within ten (10) days after its enactment, the
sangguniang barangay shall furnish copies of all
barangay ordinances to the sangguniang panlungsod or
sangguniang bayan concerned for review as to whether
the ordinance is consistent with law and city or municipal
ordinances.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(b) If the sangguniang panlungsod or sangguniang
bayan, as the case may be, fails to take action on
barangay ordinances within thirty (30) days from receipt
thereof, the same shall be deemed approved.
(c) If the sangguniang panlungsod or sangguniang
bayan, as the case may be, finds the barangay
ordinances inconsistent with law or city or municipal
ordinances, the sanggunian concerned shall, within thirty
(30) days from receipt thereof, return the same with its
comments and recommendations to the sangguniang
barangay concerned for adjustment, amendment, or
modification; in which case, the effectivity of the
barangay ordinance is suspended until such time as the
revision called for is effected.
Section 58. Enforcement of Disapproved Ordinances or
Resolutions. - Any attempt to enforce any ordinance or any
resolution approving the local development plan and public
investment program, after the disapproval thereof, shall be
sufficient ground for the suspension or dismissal of the official or
employee concerned.
Section 59. Effectivity of Ordinances or Resolutions. -
(a) Unless otherwise stated in the ordinance or the
resolution approving the local development plan and
public investment program, the same shall take effect
after ten (10) days from the date a copy thereof is
posted in a bulletin board at the entrance of the
provincial capitol or city, municipal, or barangay hall, as
the case may be, and in at least two (2) other
conspicuous places in the local government unit
concerned.
(b) The secretary to the sanggunian concerned shall
cause the posting of an ordinance or resolution in the
bulletin board at the entrance of the provincial capitol
and the city, municipal, or barangay hall in at least two
(2) conspicuous places in the local government unit
concerned not later than five (5) days after approval
thereof.
The text of the ordinance or resolution shall be
disseminated and posted in Filipino or English and in the
language understood by the majority of the people in the
local government unit concerned, and the secretary to
the sanggunian shall record such fact in a book kept for
the purpose, stating the dates of approval and posting.
(c) The gist of all ordinances with penal sanctions shall
be published in a newspaper of general circulation within
the province where the local legislative body concerned
belongs. In the absence of any newspaper of general
circulation within the province, posting of such
ordinances shall be made in all municipalities and cities
of the province where the sanggunian of origin is
situated.
(d) In the case of highly urbanized and independent
component cities, the main features of the ordinance or
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
resolution duly enacted or adopted shall, in addition to
being posted, be published once in a local newspaper of
general circulation within the city: Provided, That in the
absence thereof the ordinance or resolution shall be
published in any newspaper of general circulation.
(He just read the provision I think important with conviction
yung voice ni Dean ehh. )
IMPORTANT sabi ni Dean Sec. 54 of the LGC *please read kasi
binasa lang rin niya*
Section 187. Procedure for Approval and Effectivity of Tax,
Ordinances and Revenue Measures; Mandatory Public Hearings. -
The procedure for approval of local tax ordinances and revenue
measures shall be in accordance with the provisions of this Code:
Provided, That public hearings shall be conducted for the purpose
prior to the enactment thereof: Provided, further, That any
question on the constitutionality or legality of tax ordinances or
revenue measures may be raised on appeal within thirty (30) days
from the effectivity thereof to the Secretary of Justice who shall
render a decision within sixty (60) days from the date of receipt of
the appeal: Provided, however, That such appeal shall not have
the effect of suspending the effectivity of the ordinance and the
accrual and payment of the tax, fee, or charge levied therein:
Provided, finally, That within thirty (30) days after receipt of the
decision or the lapse of the sixty-day period without the Secretary
of Justice acting upon the appeal, the aggrieved party may file
appropriate proceedings with a court of competent jurisdiction.
When the ordinance now becomes effective, any taxpayer may
challenge the constitutionality or legality of the ordinance.
Procedurally, sec. 187 provides on what period you may challenge
the constitutionality or legality. (30 DAYS)
Take note: there is a separate period for effectivity and there is a
separate period for accrual. In other words, when the ordinance
becomes effective it does not mean that nag-accrue na yung tax.
The effectivity comes earlier then the accrual comes later. The
accrual is on the first day of the quarter next following the
effectivity of the ordinance.
When you would challenge the constitutionality, you are given only
30 days from the effectivity. So kung nag-accrue na yung tax
tsaka mo pa nalaman na may ordinance pa lang ganun and it is
already outside of the 30 day period from its effectivity then that
remedy is no longer available.
The remedy first is you bring it to the DOJ and before the DOJ you
have 30 days from effectivity thereof to bring it to the Sec of
Justice. The Sec now will act on the appeal. There will be 60 days
given to decide. Then, there will be a decision or an inaction. If
there is a decision, within 30 days after the receipt of the decision
or the lapse of the 60 day period without the DOJ acting then you
go now to the Regular Courts.
If there is a DENIAL, you go now to the RTC because this is an
issue not subject to a pecuniary estimation. So 30 days from the
receipt of the decision.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
In case of an INACTION, meaning no action during the 60 day
period. Then, you are given 30 days from the lapse of the 60 day
period to bring it to the RTC.
In other words, in the administrative appeal there is waiting period
but the only up to 60 days. If there is a decision within 60 days
then you gave 30 days to go to the RTC in case of a denial. In
case of an inaction, then you are given 30 days period from the
lapse of the 60 day period to bring it to the RTC. Now pagdating
sa RTC it is not an appeal kasi from an administrative remedy it is
now converted into a judicial action. Sa admin law that is
exhaustion of administrative remedies. So this is an original action,
hindi yan siya appeal.
From the RTC, in case the RTC will affirm the constitutionality of
the ordinance, brought to the CTA (Court of Tax Appeals). Then,
from CTA brought to the SC.
What is important also that during the period you are
challenging the validity or constitutionality is there a
suspension of the accrual and collection of the tax? Under
187, THERE IS NONE.
General Rule: There is no suspension. UNLESS ON MERITORIOUS
CASES. (Transcriber: Remember the discussion about Injunction?
Very good! )
What happens later on that eventually the SC decided that the
ordinance is null and void, it is ultra vires? Then, the taxpayer now
will ask for a refund or a credit. He may ask for a tax credit or a
tax refund.
Section 188. Publication of Tax Ordinances and Revenue
Measures. - Within ten (10) days after their approval, certified true
copies of all provincial, city, and municipal tax ordinances or
revenue measures shall be published in full for three (3)
consecutive days in a newspaper of local circulation: Provided,
however, That in provinces, cities and municipalities where there
are no newspapers of local circulation, the same may be posted in
at least two (2) conspicuous and publicly accessible places.
Specifically for tax purposes you have a separate provision as
regards publication.
Section 189. Furnishing of Copies of Tax Ordinances and
Revenue Measures. - Copies of all provincial, city, and municipal
and barangay tax ordinances and revenue measures shall be
furnished the respective local treasurers for public dissemination.
Section 190. Attempt to Enforce Void or Suspended Tax
Ordinances and revenue measures. - The enforcement of any tax
ordinance or revenue measure after due notice of the disapproval
or suspension thereof shall be sufficient ground for administrative
disciplinary action against the local officials and employees
responsible therefor.
Sec. 191 is IMPORTANT. Eto yung FLEXIBILITY PROVISION.
Section 191. Authority of Local Government Units to Adjust Rates
of Tax Ordinances. - Local government units shall have the
authority to adjust the tax rates as prescribed herein not oftener
than once every five (5) years, but in no case shall such
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
adjustment exceed ten percent (10%) of the rates fixed under this
Code.
You would notice that the rates which provinces, cities,
municipalities or barangays are allowed to impose ay may range
and the LGUs is given the authority to adjust their tax rates every
now and then for purposes of the principle of fiscal adequacy
because when you make an imposition the LGU must consider the
ability to pay of their constituents.
How often should the rates be adjusted? Under sec 191, ONCE
EVERY 5 YEARS.
What is the allowed adjustment? In no case shall such adjustment
exceed 10% of the rates fixed.
Having reach now the maximum, is there a need to go back to the
Congress to adjust the rates? NO MORE. There is no need for that
because the flexibility provision already answers it. You could
continue with the adjustments but you can only do it once every 5
years.
Section 192. Authority to Grant Tax Exemption Privileges. - Local
government units may, through ordinances duly approved, grant
tax exemptions, incentives or reliefs under such terms and
conditions as they may deem necessary.
Like in our States power of taxation, once the power to tax is
granted then it carries with it also the power to exempt. In the
case of LGUs, our Constitution grants the taxing power so once
the power is granted then the LGU also have the corresponding
power to grant tax exemptions. However, the tax exemption is not
an executive function likewise in the States power of taxation
since taxation is legislative then exemption should also be
legislative.
In the case of local taxation, the rule is the same. The function is
also legislative then therefore the grant of tax exemption is also
legislative. This time the local legislative, the Sanggunian.
(inaudible)
Section 193. Withdrawal of Tax Exemption Privileges. - Unless
otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned or controlled corporations,
except local water districts, cooperatives duly registered under
R.A. No. 6938, non-stock and non-profit hospitals and educational
institutions, are hereby withdrawn upon the effectivity of this
Code.
Those enjoying tax exemptions can be withdraw except those
exemptions given to local water districts, cooperatives under RA
6938, non-stock and non-profit hospitals and educational
institutions. There exemptions or exclusions continue even after
the effectivity of the LGC.
TAXPAYERS REMEDIES (LOCAL GOVERNMENT CODE)
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Section 194. Periods of Assessment and Collection. -
(a) Local taxes, fees, or charges shall be assessed within
five (5) years from the date they became due. No action
for the collection of such taxes, fees, or charges,
whether administrative or judicial, shall be instituted
after the expiration of such period: Provided, That. taxes,
fees or charges which have accrued before the effectivity
of this Code may be assessed within a period of three (3)
years from the date they became due.
(b) In case of fraud or intent to evade the payment of
taxes, fees, or charges, the same may be assessed
within ten (10) years from discovery of the fraud or
intent to evade payment.
(c) Local taxes, fees, or charges may be collected within
five (5) years from the date of assessment by
administrative or judicial action. No such action shall be
instituted after the expiration of said period: Provided,
however, That, taxes, fees or charges assessed before
the effectivity of this Code may be collected within a
period of three (3) years from the date of assessment.
(d) The running of the periods of prescription provided in
the preceding paragraphs shall be suspended for the
time during which:
(1) The treasurer is legally prevented from
making the assessment of collection;
(2) The taxpayer requests for a reinvestigation
and executes a waiver in writing before
expiration of the period within which to assess
or collect; and
(3) The taxpayer is out of the country or
otherwise cannot be located.
Comparing this from the NIRC, the period of assessment in the
NIRC is 3 years while in local taxation the period of assessment is
5 years. No action for collection could be done and you could not
collect anymore when there is no prior assessment that is
provided in the NIRC. You could not pursue collection remedies
whether administrative or judicial when there is no prior
assessment and that is also true in local tax because again go
back to the principle of due process.
Yung 3 years dito that apprised only to those taxes before the
effectivity of the LGC. Thats way back 1991 so wala na yun. The
period to make an assessment is 5 years. Now in case of fraud, 10
years sa NIRC and 10 years also in local tax.
Collection in the NIRC 5 years; Collection in the local tax is also
5 years. (See par. c)
Section 195. Protest of Assessment. - When the local treasurer
or his duly authorized representative finds that correct taxes, fees,
or charges have not been paid, he shall issue a notice of
assessment stating the nature of the tax, fee, or charge, the
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
amount of deficiency, the surcharges, interests and penalties.
Within sixty (60) days from the receipt of the notice of
assessment, the taxpayer may file a written protest with the local
treasurer contesting the assessment; otherwise, the assessment
shall become final and executory. The local treasurer shall decide
the protest within sixty (60) days from the time of its filing. If the
local treasurer finds the protest to be wholly or partly meritorious,
he shall issue a notice cancelling wholly or partially the
assessment. However, if the local treasurer finds the assessment
to be wholly or partly correct, he shall deny the protest wholly or
partly with notice to the taxpayer. The taxpayer shall have thirty
(30) days from the receipt of the denial of the protest or from the
lapse of the sixty (60) day period prescribed herein within which to
appeal with the court of competent jurisdiction otherwise the
assessment becomes conclusive and unappealable.
In the NIRC, ano yung magiging conclusive and unappealable? It
is not the assessment but the decision. So when there is inaction,
you could wait in the NIRC. Here when there is inaction in the
waiting and has lapse you are given 30 days from the lapse of the
60 day period. (Wala ko naintindihan )
In sec. 195, you have the proceedings for the assessment. So the
notice of assessment is not that as stringent as in the NIRC. The
requirements and the contents of the assessment notice are very
strict insofar as the NIRC. It must have the facts and the law to
which the assessment is based. Ano lang yung sa local assessment
notice? The local assessment notice will only contain or have
state the nature of the tax, charge, amount of deficiency,
surcharges, interests and penalties (read sec 195).
The notice of assessment shall be served and done within 5 years
that is the assessment period in local tax. In the NIRC, 3 years is
the assessment period. The local taxpayer has 60 days to protest.
Sec 195 does not provide the procedure of the protest. The
taxpayer will have his own creativity on making the protest
whether he is asking for reinvestigation, reconsideration that will
_____.
Now the local treasurer has 60 days to decide the protest then he
may have a decision. The local treasurer will either grant or deny
the protest. If it will be granted, then tapos na yung remedy. If it
is denied, the taxpayer shall have 30 days from the receipt of
denial to appeal. We now have what you call a judicial action. You
bring this now to the regular courts.
How about an inaction? Can the taxpayer wait forever after the 60
day period? NO. The taxpayer shall have 30 days from the denial
of the protest or the lapse of the 60 day period otherwise the
assessment becomes conclusive and unappealable. Unlike the
wordings in the NIRC mali talaga yung wording doon because
what becomes conclusive is not the assessment but the decision.
Ehh wala naman decision ang commissioner dun so it becomes a
loophole because of that pwede hintayin mo even beyond the
130(?) day period.
(He reads the provision)
Saang regular court? Since this is a protest there is already an
amount involved. It maybe depending on the jurisdictional
amount, MTC or RTC, because there is now an amount demanded
by the local treasurer.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
MTC RTC CTA SC
RTC CTA SC
The CTA has that exclusive appellate jurisdiction on local tax
matters decide by the RTC under its original jurisdiction or in its
appellate jurisdiction.
Section 196. Claim for Refund of Tax Credit. - No case or
proceeding shall be maintained in any court for the recovery of
any tax, fee, or charge erroneously or illegally collected until a
written claim for refund or credit has been filed with the local
treasurer. No case or proceeding shall be entertained in any court
after the expiration of two (2) years from the date of the payment
of such tax, fee, or charge, or from the date the taxpayer is
entitled to a refund or credit.
Actually the proceedings are almost the same as the NIRC.
In the claim for refund or credit of the local tax, it starts of course
with the payment of local tax then the local taxpayer discovers
that the local tax fee or charge has been erroneously, illegally or
excessively paid or collected. Then, there is to file a claim for
refund with the local treasurer. Then, the local treasurer decides.
The decision will either be to grant or deny the claim for refund. In
case of a denial, it is now converted into a judicial action. Saan mo
ba ito iaakyat? CTA ba agad? Like the CIR in the NIRC? (He reads
the provision) It is brought either again to the MTC or RTC
because the jurisdictional amount is involved so the proper venue
and court will depend on the amount that you are claiming for
refund.
MTC appealed to the RTC, RTC to the CTA then to SC
RTC appealed to the CTA, CTA to the SC
CRUCIAL: In the case of the denial, you bring it to the MTC or
RTC. There is that 2 year period within which to file the claim for
refund and the construction or interpretation here is that No case
or proceeding shall be entertained in any court after the expiration
of two (2) years from the date of the payment of such tax, fee, or
charge, or from the date the taxpayer is entitled to a refund or
credit.
So from the date of payment or from the date the taxpayer is
entitled to the refund, it must be within 2 years. In other words,
like the construction in the NIRC in claims for refund you should
bring the administrative action or refund within 2 years. When it is
now converted into a judicial action filed with the local courts, MTC
or RTC, it should also be within 2 years from payment. Like in the
NIRC, in case there is inaction and the 2 year period is about to
prescribe then do not wait na maglapse yan. You bring it now
either to the MTC or RTC prior to the expiration of the 2 year
period. Otherwise, the claim will be barred.
Unlike dito the CTA has exclusive appellate jurisdiction on
decisions of the RTC whether in its original or exclusive appellate
jurisdiction in local tax cases. So like the assessment and the
refunds these are local tax cases.
February 3, 2015
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
We will start with a new topic, this is real property taxation (RPT).
So as we presented this last time, RPT will cover some provisions
from Sec 197 of the Local Government Code (LGC) upto 283. That
will be the provisions which will be covered by RPT.
So RPT is simply the tax imposed on real properties. So the
subject matter of RPT is taxation on real properties. As what you
have taken up in property, this is in connection to what are
immovables. So what compose/constitute real properties are the
same as those as what you have studied in civil law.
NCC. Article 415. The following are immovable property:
(1) Land, buildings, roads and constructions of all kinds adhered to
the soil;
(2) Trees, plants, and growing fruits, while they are attached to
the land or form an integral part of an immovable;
(3) Everything attached to an immovable in a fixed manner, in
such a way that it cannot be separated therefrom without breaking
the material or deterioration of the object;
(4) Statues, reliefs, paintings or other objects for use or
ornamentation, placed in buildings or on lands by the owner of the
immovable in such a manner that it reveals the intention to attach
them permanently to the tenements;
(5) Machinery, receptacles, instruments or implements intended by
the owner of the tenement for an industry or works which may be
carried on in a building or on a piece of land, and which tend
directly to meet the needs of the said industry or works;
(6) Animal houses, pigeon-houses, beehives, fish ponds or
breeding places of similar nature, in case their owner has placed
them or preserves them with the intention to have them
permanently attached to the land, and forming a permanent part
of it; the animals in these places are included;
(7) Fertilizer actually used on a piece of land;
(8) Mines, quarries, and slag dumps, while the matter thereof
forms part of the bed, and waters either running or stagnant;
(9) Docks and structures which, though floating, are intended by
their nature and object to remain at a fixed place on a river, lake,
or coast;
(10) Contracts for public works, and servitudes and other real
rights over immovable property. (334a)
However, the concept of what would constitute/compose real
properties does not pertain only to lands, buildings and all other
improvements attached to the land. We have also introduced the
concept of immovable by destination, so there was this case a few
years back. When the country was having power shortage, one of
the short term solution to this power shortage problem, they
released power barges which were power equipment introduced
on the barge or on the vessel, which will supply electricity power
or supply energy to one area.
G.R. No. 168557 February 16, 2007
FELS ENERGY, INC., Petitioner,
vs. THE PROVINCE OF BATANGAS and THE OFFICE OF THE
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
PROVINCIAL ASSESSOR OF BATANGAS, Respondents.
x----------------------------------------------------x
G.R. No. 170628 February 16, 2007
NATIONAL POWER CORPORATION, Petitioner,
vs. LOCAL BOARD OF ASSESSMENT APPEALS OF
BATANGAS, LAURO C. ANDAYA, in his capacity as the
Assessor of the Province of Batangas, and the PROVINCE
OF BATANGAS represented by its Provincial Assessor,
Respondents.
In one case, the Napocor hired the services of Fels Energy, which
was this contractor having power barges and since they were
engaged by napocor, the LGU of Batangas assessed Fels energy
for RPT on the vessels or barges which Fels Energy protested
claiming that power barges were not real properties and they were
also claiming that they were not subject to tax, for the reason that
since they were engaged by NPC they were entitled to exemption
NPC was entitled to with regard to RPT being a government
instrumentality.
Held: As found by the appellate court, the CBAA and LBAA power
barges are real property and are thus subject to real property tax.
This is also the inevitable conclusion, considering that G.R. No.
165113 was dismissed for failure to sufficiently show any
reversible error. Tax assessments by tax examiners are presumed
correct and made in good faith, with the taxpayer having the
burden of proving otherwise.48 Besides, factual findings of
administrative bodies, which have acquired expertise in their field,
are generally binding and conclusive upon the Court; we will not
assume to interfere with the sensible exercise of the judgment of
men especially trained in appraising property. Where the judicial
mind is left in doubt, it is a sound policy to leave the assessment
undisturbed.49 We find no reason to depart from this rule in this
case.
In Consolidated Edison Company of New York, Inc., et al. v. The
City of New York, et al.,50 a power company brought an action to
review property tax assessment. On the citys motion to dismiss,
the Supreme Court of New York held that the barges on which
were mounted gas turbine power plants designated to generate
electrical power, the fuel oil barges which supplied fuel oil to the
power plant barges, and the accessory equipment mounted on the
barges were subject to real property taxation.
Moreover, Article 415 (9) of the New Civil Code provides that
"[d]ocks and structures which, though floating, are intended by
their nature and object to remain at a fixed place on a river, lake,
or coast" are considered immovable property. Thus, power barges
are categorized as immovable property by destination, being in the
nature of machinery and other implements intended by the owner
for an industry or work which may be carried on in a building or on
a piece of land and which tend directly to meet the needs of said
industry or work.
Now on the issue that Fels energy is exempted.
Petitioners maintain nevertheless that the power barges are
exempt from real estate tax under Section 234 (c) of R.A. No.
7160 because they are actually, directly and exclusively used by
petitioner NPC, a government- owned and controlled corporation
engaged in the supply, generation, and transmission of electric
power.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
We affirm the findings of the LBAA and CBAA that the owner of
the taxable properties is petitioner FELS, which in fine, is the entity
being taxed by the local government. As stipulated under Section
2.11, Article 2 of the Agreement:
OWNERSHIP OF POWER BARGES. POLAR shall own the Power
Barges and all the fixtures, fittings, machinery and equipment on
the Site used in connection with the Power Barges which have
been supplied by it at its own cost. POLAR shall operate, manage
and maintain the Power Barges for the purpose of converting Fuel
of NAPOCOR into electricity.52
It follows then that FELS cannot escape liability from the payment
of realty taxes by invoking its exemption in Section 234 (c) of R.A.
No. 7160, which reads:
SECTION 234. Exemptions from Real Property Tax. The following
are exempted from payment of the real property tax:
xxx
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government-owned or
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power; x x x
Indeed, the law states that the machinery must be actually,
directly and exclusively used by the government owned or
controlled corporation; nevertheless, petitioner FELS still cannot
find solace in this provision because Section 5.5, Article 5 of the
Agreement provides:
OPERATION. POLAR undertakes that until the end of the Lease
Period, subject to the supply of the necessary Fuel pursuant to
Article 6 and to the other provisions hereof, it will operate the
Power Barges to convert such Fuel into electricity in accordance
with Part A of Article 7.53
It is a basic rule that obligations arising from a contract have the
force of law between the parties. Not being contrary to law,
morals, good customs, public order or public policy, the parties to
the contract are bound by its terms and conditions.54
Time and again, the Supreme Court has stated that taxation is the
rule and exemption is the exception.55 The law does not look with
favor on tax exemptions and the entity that would seek to be thus
privileged must justify it by words too plain to be mistaken and too
categorical to be misinterpreted.56 Thus, applying the rule of strict
construction of laws granting tax exemptions, and the rule that
doubts should be resolved in favor of provincial corporations, we
hold that FELS is considered a taxable entity.
The mere undertaking of petitioner NPC under Section 10.1 of the
Agreement, that it shall be responsible for the payment of all real
estate taxes and assessments, does not justify the exemption. The
privilege granted to petitioner NPC cannot be extended to FELS.
The covenant is between FELS and NPC and does not bind a third
person not privy thereto, in this case, the Province of Batangas.
It must be pointed out that the protracted and circuitous litigation
has seriously resulted in the local governments deprivation of
revenues. The power to tax is an incident of sovereignty and is
unlimited in its magnitude, acknowledging in its very nature no
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
perimeter so that security against its abuse is to be found only in
the responsibility of the legislature which imposes the tax on the
constituency who are to pay for it.57 The right of local
government units to collect taxes due must always be upheld to
avoid severe tax erosion. This consideration is consistent with the
State policy to guarantee the autonomy of local governments58
and the objective of the Local Government Code that they enjoy
genuine and meaningful local autonomy to empower them to
achieve their fullest development as self-reliant communities and
make them effective partners in the attainment of national goals.
*stories about pipelines, railways being real properties*
Now lets go to
Section 197. Scope. - This Title shall govern the administration,
appraisal, assessment, levy and collection of real property tax.
One of the taxes which is classified as tax which is non-self-
assessing (NSA) is RPT. Unlike the taxes in the NIRC where they
are self-assessing (the taxpayer himself is the one who determines
the liability as well as the payment of the tax). So precisely in the
NIRC the taxpayers are required to file returns and on the basis of
the returns, they make the declaration as long as on the basis of
the computation, the tax theyre going to pay is correct based on
their return.
On the other hand, the opposite is the NSA because the property
owner cannot determine the RPT liability. Now as mentioned in
197, the administration, appraisal, assessment, levy and collection
of real property tax, so the bases involved in the RPT is:
1. Determination of the assessed value
a. Before you arrive at the assessed value (AV),
the taxpayer must first be able to know the fair
market value (FMV) which is the taxpayer
may not be able to know the FMV of his
property.
b. To arrive at the AV, the FMV x what we call the
assessment level (is provided by the LGC)
under our RPT provisions, depending on the
category and classification of the property. Pag
commercial yung RP classification, the higher
the assessment, pagresidential and agricultural
land, mas mababa
c. So this work is the job of the local assessor, to
determine the FMV as well as AV of the real
property.
2. Once you have the assessed value, the RPT can now be
determined because the RPT is:
RPT = AV x rate
3. And the determination and collection of the RPT is done
by the local treasurer.
So if you notice the taxpayer will not have any participation
because the determination of the AV is done by the local assessor,
the document resulting from this is the real property tax
declaration. It is the document prepared and issued by your local
assessor whether city, municipality or provincial, indicating there in
the real property. The property owners must make a tax
declaration before the assessor that he is the owner of such a
property. So they will present their ownership over that property,
or his claim by having a deed of sale or a document for transfer of
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III Manresa 2014 - 2015
rights, the improvements he introducedin the event that it is a
private land, so all these will have to be contained. Kung
binakuran with fences, that has also to be declared because the
fences is part of the improvements of the land. Then the location,
the area, the classification or nature of the use. Now remember
the taxation of the real properties will ALWAYS be on the basis of
actual use. So even if the properties have been zonified as
residential, pero tinayuan mo ng commercial bldg, the bldg will be
assessed as a commercial real property. So this will be the items
or matters, or information that will be entered in your real
property tax declaration. So this document, the real property tax
declaration which will contain the FMV and the AV ito yung
dadalhin niyo sa local treasurer, and the local treasurer will now
compute your RPT. Nakita mo yung tax declaration, and the
treasurers office will make a computation on your tax due on your
real property.
So this is basically what RPT is all about, the assessed value and
the tax. So you have there the list or the FMV which is what we
call the appraisal. Now, the concept of assessment is arriving at
what is the assessed value.
Section 198. Fundamental Principles. - The appraisal, assessment,
levy and collection of real property tax shall be guided by the
following fundamental principles:
(a) Real property shall be appraised at its current and fair market
value;
So thats the first principle. So you have computation of the FMV.
How is this done? Through an appraisal process and what is
appraisal?
Sec. 199
(e) "Appraisal" is the act or process of determining the value of
property as of a specified date for a specific purpose;
And what si the result? To arrive at what we call to arrive at the
FMV.
(l) "Fair Market Value" is the price at which a property may be sold
by a seller who is not compelled to sell and bought by a buyer who
is not compelled to buy;
This is the traditional determination of FMV. However, there are
other modes of determining FMV.
One, as mentioned in the definition, is the sales approach. The
other one is the income approach.
G.R. Nos. L-49839-46 April 26, 1991
JOSE B. L. REYES and EDMUNDO A. REYES, petitioners,
vs.PEDRO ALMANZOR, VICENTE ABAD SANTOS, JOSE
ROO, in their capacities as appointed and Acting
Members of the CENTRAL BOARD OF ASSESSMENT
APPEALS; TERESITA H. NOBLEJAS, ROMULO M. DEL
ROSARIO, RAUL C. FLORES, in their capacities as
appointed and Acting Members of the BOARD OF
ASSESSMENT APPEALS of Manila; and NICOLAS CATIIL in
his capacity as City Assessor of Manila, respondents.
This is the case pertaining to the real properties of JBL Reyes. He
had apartment dwellings somewhere in Tondo. The city of manila
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
assessed the apartment dwellings under the sales approach. JBL
reyes claims that the sales approach is not the proper basis of
determining the FMV of his property because the real property is
being restricted by the rent control law. The income that could be
generated by his apartment dwellings cannot be controlled by the
lessor or the landlord because that law controls how much
revenue you could impose to your tenants. So it would not be
reasonable to appraise the FMV of the apartment dwellings on the
basis of the sales approach because the income is being restricted
by the law. SO the proper method of valuing these real properties
should be the income approach. So real properties therefore
should be based on the income earned of that real properties. SO
you have that method of determining the FMV.
Held: The crux of the controversy is in the method used in tax
assessment of the properties in question. Petitioners maintain that
the "Income Approach" method would have been more realistic for
in disregarding the effect of the restrictions imposed by P.D. 20 on
the market value of the properties affected, respondent Assessor
of the City of Manila unlawfully and unjustifiably set increased new
assessed values at levels so high and successive that the resulting
annual real estate taxes would admittedly exceed the sum total of
the yearly rentals paid or payable by the dweller tenants under
P.D. 20. Hence, petitioners protested against the levels of the
values assigned to their properties as revised and increased on the
ground that they were arbitrarily excessive, unwarranted,
inequitable, confiscatory and unconstitutional (Rollo, p. 10-A).
On the other hand, while respondent Board of Tax Assessment
Appeals admits in its decision that the income approach is used in
determining land values in some vicinities, it maintains that when
income is affected by some sort of price control, the same is
rejected in the consideration and study of land values as in the
case of properties affected by the Rent Control Law for they do
not project the true market value in the open market (Rollo, p.
21). Thus, respondents opted instead for the "Comparable Sales
Approach" on the ground that the value estimate of the properties
predicated upon prices paid in actual, market transactions would
be a uniform and a more credible standards to use especially in
case of mass appraisal of properties (Ibid.). Otherwise stated,
public respondents would have this Court completely ignore the
effects of the restrictions of P.D. No. 20 on the market value of
properties within its coverage. In any event, it is unquestionable
that both the "Comparable Sales Approach" and the "Income
Approach" are generally acceptable methods of appraisal for
taxation purposes (The Law on Transfer and Business Taxation by
Hector S. De Leon, 1988 Edition). However, it is conceded that the
propriety of one as against the other would of course depend on
several factors. Hence, as early as 1923 in the case of Army &
Navy Club, Manila v. Wenceslao Trinidad, G.R. No. 19297 (44 Phil.
383), it has been stressed that the assessors, in finding the value
of the property, have to consider all the circumstances and
elements of value and must exercise a prudent discretion in
reaching conclusions.
Under Art. VIII, Sec. 17 (1) of the 1973 Constitution, then
enforced, the rule of taxation must not only be uniform, but must
also be equitable and progressive.
Uniformity has been defined as that principle by which all taxable
articles or kinds of property of the same class shall be taxed at the
same rate (Churchill v. Concepcion, 34 Phil. 969 [1916]).
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Notably in the 1935 Constitution, there was no mention of the
equitable or progressive aspects of taxation required in the 1973
Charter (Fernando "The Constitution of the Philippines", p. 221,
Second Edition). Thus, the need to examine closely and determine
the specific mandate of the Constitution.
Taxation is said to be equitable when its burden falls on those
better able to pay. Taxation is progressive when its rate goes up
depending on the resources of the person affected (Ibid.).
The power to tax "is an attribute of sovereignty". In fact, it is the
strongest of all the powers of government. But for all its plenitude
the power to tax is not unconfined as there are restrictions.
Adversely effecting as it does property rights, both the due
process and equal protection clauses of the Constitution may
properly be invoked to invalidate in appropriate cases a revenue
measure. If it were otherwise, there would be truth to the 1903
dictum of Chief Justice Marshall that "the power to tax involves the
power to destroy." The web or unreality spun from Marshall's
famous dictum was brushed away by one stroke of Mr. Justice
Holmes pen, thus: "The power to tax is not the power to destroy
while this Court sits. So it is in the Philippines " (Sison, Jr. v.
Ancheta, 130 SCRA 655 [1984]; Obillos, Jr. v. Commissioner of
Internal Revenue, 139 SCRA 439 [1985]).
In the same vein, the due process clause may be invoked where a
taxing statute is so arbitrary that it finds no support in the
Constitution. An obvious example is where it can be shown to
amount to confiscation of property. That would be a clear abuse of
power (Sison v. Ancheta, supra).
The taxing power has the authority to make a reasonable and
natural classification for purposes of taxation but the government's
act must not be prompted by a spirit of hostility, or at the very
least discrimination that finds no support in reason. It suffices then
that the laws operate equally and uniformly on all persons under
similar circumstances or that all persons must be treated in the
same manner, the conditions not being different both in the
privileges conferred and the liabilities imposed (Ibid., p. 662).
Finally under the Real Property Tax Code (P.D. 464 as amended),
it is declared that the first Fundamental Principle to guide the
appraisal and assessment of real property for taxation purposes is
that the property must be "appraised at its current and fair market
value."
By no strength of the imagination can the market value of
properties covered by P.D. No. 20 be equated with the market
value of properties not so covered. The former has naturally a
much lesser market value in view of the rental restrictions.
Ironically, in the case at bar, not even the factors determinant of
the assessed value of subject properties under the "comparable
sales approach" were presented by the public respondents,
namely: (1) that the sale must represent a bonafide arm's length
transaction between a willing seller and a willing buyer and (2) the
property must be comparable property (Rollo, p. 27). Nothing can
justify or support their view as it is of judicial notice that for
properties covered by P.D. 20 especially during the time in
question, there were hardly any willing buyers. As a general rule,
there were no takers so that there can be no reasonable basis for
the conclusion that these properties were comparable with other
residential properties not burdened by P.D. 20. Neither can the
given circumstances be nonchalantly dismissed by public
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
respondents as imposed under distressed conditions clearly
implying that the same were merely temporary in character. At
this point in time, the falsity of such premises cannot be more
convincingly demonstrated by the fact that the law has existed for
around twenty (20) years with no end to it in sight.
Verily, taxes are the lifeblood of the government and so should be
collected without unnecessary hindrance. However, such collection
should be made in accordance with law as any arbitrariness will
negate the very reason for government itself It is therefore
necessary to reconcile the apparently conflicting interests of the
authorities and the taxpayers so that the real purpose of taxations,
which is the promotion of the common good, may be achieved
(Commissioner of Internal Revenue v. Algue Inc., et al., 158 SCRA
9 [1988]). Consequently, it stands to reason that petitioners who
are burdened by the government by its Rental Freezing Laws (then
R.A. No. 6359 and P.D. 20) under the principle of social justice
should not now be penalized by the same government by the
imposition of excessive taxes petitioners can ill afford and
eventually result in the forfeiture of their properties.
By the public respondents' own computation the assessment by
income approach would amount to only P10.00 per sq. meter at
the time in question.
PREMISES CONSIDERED, (a) the petition is GRANTED; (b) the
assailed decisions of public respondents are REVERSED and SET
ASIDE; and (e) the respondent Board of Assessment Appeals of
Manila and the City Assessor of Manila are ordered to make a new
assessment by the income approach method to guarantee a fairer
and more realistic basis of computation (Rollo, p. 71).
The third is what we call the Replacement Cost:
(t) "Replacement or Reproduction Cost" is the cost that would be
incurred on the basis of current prices, in acquiring an equally
desirable substitute property, or the cost of reproducing a new
replica of the property on the basis of current prices with the same
or closely similar material;
The valuation, to arrive at FMV, could be determined on what
would be the cost to build a new one, the replacement or the
reproduction cost. This valuation is usually done on machineries
and they would make or determine the FMV on the basis of
reproduction cost.
So you have these modes of determining FMV, so real properties
will be appraised at its FMV.
2nd principle:
(b) Real property shall be classified for assessment purposes on
the basis of its actual use;
So the assessment will be based on actual use. Ano yung concept
ng assessment?
(f) "Assessment" is the act or process of determining the value of
a property, or proportion thereof subject to tax, including the
discovery, listing, classification, and appraisal of properties;
So the real property after having been appraised and arriving at
the FMV will now go thru the process of an assessment. What
would be the actual use?
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III Manresa 2014 - 2015
(b) "Actual Use" refers to the purpose for which the property is
principally or predominantly utilized by the person in possession
thereof;
So in the usage of the property, it may be used as:
(d) "Agricultural Land" is land devoted principally to the planting of
trees, raising of crops, livestock and poultry, dairying, salt making,
inland fishing and similar aquacultural activities, and other
agricultural activities, and is not classified as mineral, timber,
residential, commercial or industrial land; OR
(i) "Commercial Land" is land devoted principally for the object of
profit and is not classified as agricultural, industrial, mineral,
timber, or residential land; OR
(n) "Industrial Land" is land devoted principally to industrial
activity as capital investment and is not classified as agricultural,
commercial, timber, mineral or residential land; OR
(p) "Mineral Lands" are lands in which minerals, metallic or non-
metallic, exist in sufficient quantity or grade to justify the
necessary expenditures to extract and utilize such materials; OR
(u) "Residential Land" is land principally devoted to habitation.
So you have these different uses. So the assessment will not
result, after going thru the assessment on the basis of its actual
use, then there will be what we call taking a portion of the
property which we call the assessment level.
(g) "Assessment Level" is the percentage applied to the fair
market value to determine the taxable value of the property;
We can see this in 218. [please see codals kay taas kaayo ang
provision ] this is a certain percentage charged on the land
depending on the classification or use. If it is a residential land,
only 20%, meaning 20% of the FMV is the assessment level. Pag
agricultural 40% because the AV is what we call also the taxable
value, FMV of the real property x the assessment level. So it is
synonymous to taxable value, so the tax base is the assessed
value.
Now, before arriving at the assessed value, you should have first
the FMV. And the assessed value will be determined ano yung
actual use because you have the assessment level, which is also
based on the classification of property [dean recites types of
lands].
(c) Real property shall be assessed on the basis of a uniform
classification within each local government unit;
So we have that principle of uniformity and equality that for as
long as the real property is found within the territorial jurisdiction
of the LGU, the assessment will be based on the same or uniform
classification. So we have that rule on uniformity in the
classification or the use the assessment process in these real
properties.
Then you have
(d) The appraisal, assessment, levy and collection of real property
tax shall not be let to any private person; and
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
So you have the offices in-charge or the Av for purposes of
issuance of tax declaration, you have the local assessor. That is
the office in-charge to make the appraisal and assessment.
The other part is with regard to levy and collection. The levy and
collection this is done by the local treasurer. Now, like the local
taxes, all the provisions on RPT under the LGC must be embodied
in an ordinance. LGUs have the power to enact an ordinance to
provide for RPT so all these provisions in RPT found in the LGC
have to be enacted through an ordinance.
Like in the case of revenue code of Davao City, both local tax
provisions as well as RPT are embodied in an ordinance.
(e) The appraisal and assessment of real property shall be
equitable.
Meaning on the basis of ability to pay.
Then you have the definition of terms. Then
Section 200. Administration of the Real Property Tax. - The
provinces and cities, including the municipalities within the
Metropolitan Manila Area, shall be primarily responsible for the
proper, efficient and effective administration of the real property
tax.
Then you have this matter of appraisal and assessment.
Section 201. Appraisal of Real Property. - All real property,
whether taxable or exempt, shall be appraised at the current and
fair market value prevailing in the locality where the property is
situated. The Department of Finance shall promulgate the
necessary rules and regulations for the classification, appraisal,
and assessment of real property pursuant to the provisions of this
Code.
So this is a basic rule in connection with appraisal and assessment.
So all real property owners shall have the properties, whether
taxable or exempt, you should have them appraised at the current
and FMV.
Section 202. Declaration of real Property by the Owner or
Administrator. - It shall be the duty of all persons, natural or
juridical, owning or administering real property, including the
improvements therein, within a city or municipality, or their duly
authorized representative, to prepare, or cause to be prepared,
and file with the provincial, city or municipal assessor, a sworn
statement declaring the true value of their property, whether
previously declared or undeclared, taxable or exempt, which shall
be the current and fair market value of the property, as
determined by the declarant. Such declaration shall contain a
description of the property sufficient in detail to enable the
assessor or his deputy to identify the same for assessment
purposes. The sworn declaration of real property herein
referred to shall be filed with the assessor concerned once every
three (3) years during the period from January first (1st) to June
thirtieth (30th) commencing with the calendar year 1992.
Pag gumawa ka ng bahay, the building and the structures have to
be included, pag na-fence off mo, you should have them declared.
If you have agricultural lands, it should not only be the lands that
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
should be declared, it should also be the plantings, trees, or the
agricultural products produced.
Section 203. Duty of Person Acquiring Real Property or Making
Improvement Thereon. - It shall also be the duty of any person, or
his authorized representative, acquiring at any time real property
in any municipality or city or making any improvement on real
property, to prepare, or cause to be prepared, and file with the
provincial, city or municipal assessor, a sworn statement declaring
the true value of subject property, within sixty (60) days after the
acquisition of such property or upon completion or occupancy of
the improvement, whichever comes earlier.
As a new owner, you have that duty under 203 acquiring real
property or making improvement for the first time. After getting a
job, you decided to acquire real property. So when you become an
owner of that residential land, as the owner, you have that duty
Sec 203 to declare that for RPT purposes.
What will happen if you dont declare that? Then, the previous
owner will still be the person in the records of the assessor kasi if
you are a new owner and you will declare that, then you can send
your new title then the previous tax declaration will be cancelled
because there is now a new owner. If that is not done then the
previous owner will still be the one there in the records of the
assessor. Kasi if you are the new owner and you declare that, you
will send your new title, then the previous tax declaration will be
cancelled because there is a new owner. If that is not done then
the previous owner will still be the one there in the records of the
assessor. So since the new owner does not perform the duty of
declaring it and does not know he has to pay a RPT then that real
property is in danger of being delinquent from taxes.
So under the RPT, there is what is call a delinquency sale of real
properties. You will notice that those who havent paid their RPT,
your local treasurer will publish the list of property owners and the
real properties that is delinquent and ito yung tax due. If these will
not be paid, then these properties will be up for auction. So if you
are the previous owner and having read that publication, you will
not care kasi hindi ka naman talaga ang may-ari, nabenta na. And
what will happen to the new owner? Even when the new owner is
not aware of his duties and responsibilities his properties will be in
danger of being under auction kasi he failed to make a
declaration. So once he fails to make a declaration and there is a
buyer to that property then he will have that difficulty of getting
out of that mess then he has to pay for RPT, then go to the
assessor, the treasurer, and try to fix the mess he made. So to
avoid that situation, you have that obligation in 202. You must do
that duty to declare your real properties.
Now, having acquired that land, you put up a residential bldg,
once that is completed, that residential bldg has to be declared.
Now you have 2 tax declarations: 1 of the land, and the other for
the bldg. and all these will be subject to the RPT. So you also have
that duty when once an improvement has been made, then the
improvement has also to be declared.
Section 204. Declaration of Real Property by the Assessor. - When
any person, natural or juridical, by whom real property is required
to be declared under Section 202 hereof, refuses or fails for any
reason to make such declaration within the time prescribed, the
provincial, city or municipal assessor shall himself declare the
property in the name of the defaulting owner, if known, or against
an unknown owner, as the case may be, and shall assess the
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
property for taxation in accordance with the provision of this Title.
No oath shall be required of a declaration thus made by the
provincial, city or municipal assessor.
Ang assessor na ang gagawa ng declaration.
Section 205. Listing of Real Property in the Assessment Rolls. -
(a) In every province and city, including the municipalities within
the Metropolitan Manila Area, there shall be prepared and
maintained by the provincial, city or municipal assessor an
assessment roll wherein shall be listed all real property, whether
taxable or exempt, located within the territorial jurisdiction of the
local government unit concerned. Real property shall be listed,
valued and assessed in the name of the owner or administrator, or
anyone having legal interest in the property.
(b) The undivided real property of a deceased person may be
listed, valued and assessed in the name of the estate or of the
heirs and devisees without designating them individually; and
undivided real property other than that owned by a deceased may
be listed, valued and assessed in the name of one or more co-
owners: Provided, however, That such heir, devisee, or co-owner
shall be liable severally and proportionately for all obligations
imposed by this Title and the payment of the real property tax
with respect to the undivided property.
(c) The real property of a corporation, partnership, or association
shall be listed, valued and assessed in the same manner as that of
an individual.
(d) Real property owned by the Republic of the Philippines, its
instrumentalities and political subdivisions, the beneficial use of
which has been granted, for consideration or otherwise, to a
taxable person, shall be listed, valued and assessed in the name of
the possessor, grantee or of the public entity if such property has
been acquired or held for resale or lease.
The assessment roll is an inventory and a list of properties within
the territory of the assessor.
Government lands are also subject to tax declaration, valuation,
assessment and RPT purposes. Ano yung nakalagay sa
declaration? Republic of the Philippines. If it is the City of Davao, it
will also have its own tax declaration because whether you are
taxable or exempt whether private or government, these real
properties will have na owner. These entities whether natural or
juridical must make the corresponding declaration.
Section 206. Proof of Exemption of Real Property from Taxation. -
Every person by or for whom real property is declared, who shall
claim tax exemption for such property under this Title shall file
with the provincial, city or municipal assessor within thirty (30)
days from the date of the declaration of real property sufficient
documentary evidence in support of such claim including corporate
charters, title of ownership, articles of incorporation, by-laws,
contracts, affidavits, certifications and mortgage deeds, and similar
documents.
If the required evidence is not submitted within the period herein
prescribed, the property shall be listed as taxable in the
assessment roll. However, if the property shall be proven to be tax
exempt, the same shall be dropped from the assessment roll.
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
So if you declare this real property and it is exempted, you a non-
stock non-profit educational institution. Or you are religious. So
the Bishop of the Roman Catholic Church as a corporation sole is
the owner of the real properties, or the parishes where the lands
where the church are constructed or built, this is owned by the
archdiocese thru the Bishop of the RCC.
So when tax exempt persons are required to declare the real
properties, then they must claim that they are exempted for RPT
purposes, they must submit proof of the exemption.
While under the Constitution, the exemption is based on actual
use:
Art. XIV. Sec. 4. All revenues and assets of non-stock, non-profit
educational institutions used actually, directly, and exclusively for
educational purposes shall be exempt from taxes and duties.
Art. VI. Sec. 28. Charitable institutions, churches and personages
or convents appurtenant thereto, mosques, non-profit cemeteries,
and all lands, buildings, and improvements, actually, directly, and
exclusively used for religious, charitable, or educational purposes
shall be exempt from taxation.
Then you must show proof that the land that is used by the church
as the residence of the archbishop, etc, to support the exemption.
In the case of non-stock, non-profit educational institution, aside
from proof that you are owners of that land or bldg, submit proof
that they have been used as classrooms. Submit other documents
to prove the fact of your exemption.
So in 206, the burden is on the taxpayer. Read this together with:
Section 234. Exemptions from Real Property Tax. - The following
are exempted from payment of the real property tax:
(a) Real property owned by the Republic of the Philippines or any
of its political subdivisions except when the beneficial use thereof
has been granted, for consideration or otherwise, to a taxable
person;
So even if owned by the government but leased by a private
person, then that property will still be subject to RPT because the
actual use is not by the government but the private person.
(b) Charitable institutions, churches, parsonages or convents
appurtenant thereto, mosques, non-profit or religious cemeteries
and all lands, buildings, and improvements actually, directly, and
exclusively used for religious, charitable or educational purposes;
(c) All machineries and equipment that are actually, directly and
exclusively used by local water districts and government owned or
controlled corporations engaged in the supply and distribution of
water and/or generation and transmission of electric power;
In the case of local water districts, the exemption will cover
machineries and equipments used by the LWDs. So pati
NAPOCOR. But remember that the exemption pertains to the
machineries and the equipment.
(d) All real property owned by duly registered cooperatives as
provided for under R.A. No. 6938 [with the CDA]; and
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
EN BANC
[G.R. No. 143076. June 10, 2003]
PHILIPPINE RURAL ELECTRIC COOPERATIVES
ASSOCIATION, INC. (PHILRECA); AGUSAN DEL NORTE
ELECTRIC COOPERATIVE, INC. (ANECO); ILOILO I
ELECTRIC COOPERATIVE, INC. (ILECO I); and ISABELA I
ELECTRIC COOPERATIVE, INC. (ISELCO I), petitioners, vs.
THE SECRETARY, DEPARTMENT OF INTERIOR AND LOCAL
GOVERNMENT, and THE SECRETARY, DEPARTMENT OF
FINANCE, respondents.
So we have that case of Philippine Rural Electric Coop. The
PhiRECA is the association composed of the rural electric coops
registered with the NEDA. One of the issues they raised before the
SC is that this provision under 234 that only those coops
registered with the CDA to be entitled to exemption is
unconstitutional for being a violation of the equal protection
clause.
Held: Not Constitutional. The pertinent parts of Sections 193 and
234 of the Local Government Code provide:
Section 193. Withdrawal of Tax Exemption Privileges.Unless
otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned and controlled corporations,
except local water districts, cooperatives duly registered under
R.A. No. 6938, non-stock and non-profit hospitals and educational
institutions, are hereby withdrawn upon the effectivity of this
Code.
.
Section 234. Exemptions from real property tax.The following
are exempted from payment of the real property tax:
(d) All real property owned by duly registered cooperatives as
provided for under R.A. No. 6938; and
Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by, all
persons whether natural or juridical, including all government-
owned and controlled corporations are hereby withdrawn upon
effectivity of this Code.[6]
Petitioners argue that the above provisions of the Local
Government Code are unconstitutional for violating the equal
protection clause. Allegedly, said provisions unduly discriminate
against petitioners who are duly registered cooperatives under
P.D. No. 269, as amended, and not under R.A. No. 6938 or the
Cooperative Code of the Philippines. They stress that cooperatives
registered under R.A. No. 6938 are singled out for tax exemption
privileges under the Local Government Code. They maintain that
electric cooperatives registered with the NEA under P.D. No. 269,
as amended, and electric cooperatives registered with the
Cooperative Development Authority (CDA) under R.A. No. 6938
are similarly situated for the following reasons: a) petitioners are
registered with the NEA which is a government agency like the
CDA; b) petitioners, like CDA-registered cooperatives, operate for
service to their member-consumers; and c) prior to the enactment
of the Local Government Code, petitioners, like CDA-registered
cooperatives, were already tax-exempt.[7] Thus, petitioners
contend that to grant tax exemptions from local government
taxes, including real property tax under Sections 193 and 234 of
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From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
the Local Government Code only to registered cooperatives under
R.A. No. 6938 is a violation of the equal protection clause.
We are not persuaded. The equal protection clause under the
Constitution means that no person or class of persons shall be
deprived of the same protection of laws which is enjoyed by other
persons or other classes in the same place and in like
circumstances.[8] Thus, the guaranty of the equal protection of
the laws is not violated by a law based on reasonable
classification. Classification, to be reasonable, must (1) rest on
substantial distinctions; (2) be germane to the purposes of the
law; (3) not be limited to existing conditions only; and (4) apply
equally to all members of the same class.[9]
We hold that there is reasonable classification under the Local
Government Code to justify the different tax treatment between
electric cooperatives covered by P.D. No. 269, as amended, and
electric cooperatives under R.A. No. 6938.
First, substantial distinctions exist between cooperatives under
P.D. No. 269, as amended, and cooperatives under R.A. No. 6938.
These distinctions are manifest in at least two material respects
which go into the nature of cooperatives envisioned by R.A. No.
6938 and which characteristics are not present in the type of
cooperative associations created under P.D. No. 269, as amended.
a. Capital Contributions by Members
A cooperative under R.A. No. 6938 is defined as:
[A] duly registered association of persons with a common bond of
interest, who have voluntarily joined together to achieve a lawful
common or social economic end, making equitable contributions to
the capital required and accepting a fair share of the risks and
benefits of the undertaking in accordance with universally
accepted cooperative principles.[10]
The above definition provides for the following elements of a
cooperative: a) association of persons; b) common bond of
interest; c) voluntary association; d) lawful common social or
economic end; e) capital contributions; f) fair share of risks and
benefits; g) adherence to cooperative values; and g) registration
with the appropriate government authority.[11]
The importance of capital contributions by members of a
cooperative under R.A. No. 6938 was emphasized during the
Senate deliberations as one of the key factors which distinguished
electric cooperatives under P.D. No. 269, as amended, from
electric cooperatives under the Cooperative Code.
Nowhere in P.D. No. 269, as amended, does it require
cooperatives to make equitable contributions to capital. Petitioners
themselves admit that to qualify as a member of an electric
cooperative under P.D. No. 269, only the payment of a P5.00
membership fee is required which is even refundable the moment
the member is no longer interested in getting electric service from
the cooperative or will transfer to another place outside the area
covered by the cooperative.[13] However, under the Cooperative
Code, the articles of cooperation of a cooperative applying for
registration must be accompanied with the bonds of the
accountable officers and a sworn statement of the treasurer
elected by the subscribers showing that at least twenty-five per
cent (25%) of the authorized share capital has been subscribed
and at least twenty-five per cent (25%) of the total subscription
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
has been paid and in no case shall the paid-up share capital be
less than Two thousand pesos (P2,000.00).[14]
b. Extent of Government Control over Cooperatives
Another principle adhered to by the Cooperative Code is the
principle of subsidiarity. Pursuant to this principle, the government
may only engage in development activities where cooperatives do
not posses the capability nor the resources to do so and only upon
the request of such cooperatives.[15] Thus, Article 2 of the
Cooperative Code provides:
Art. 2. Declaration of Policy. It is the declared policy of the
State to foster the creation and growth of cooperatives as a
practical vehicle for prompting self-reliance and harnessing people
power towards the attainment of economic development and
social justice. The State shall encourage the private sector to
undertake the actual formation and organization to cooperatives
and shall create an atmosphere that is conducive to the growth
and development of these cooperatives.
Towards this end, the Government and all its branches,
subdivisions, instrumentalities and agencies shall ensure the
provision of technical guidance, financial assistance and other
services to enable said cooperatives to develop into viable and
responsive economic enterprises and thereby bring about a strong
cooperative movement that is free from any conditions that might
infringe upon the autonomy or organizational integrity of
cooperatives.
Further, the State recognizes the principle of subsidiarity under
which the cooperative sector will initiate and regulate within its
own ranks the promotion and organization, training and research,
audit and support services relating to cooperatives with
government assistance where necessary.[16]
Accordingly, under the charter of the CDA, or the primary
government agency tasked to promote and regulate the
institutional development of cooperatives, it is the declared policy
of the State that:
[g]overnment assistance to cooperatives shall be free from any
restriction and conditionality that may in any manner infringe upon
the objectives and character of cooperatives as provided in this
Act. The State shall, except as provided in this Act, maintain the
policy of noninterference in the management and operation of
cooperatives.[17]
In contrast, P.D. No. 269, as amended by P.D. No. 1645, is replete
with provisions which grant the NEA, upon the happening of
certain events, the power to control and take over the
management and operations of cooperatives registered under it.
Thus:
a) the NEA Administrator has the power to designate, subject to
the confirmation of the Board of Administrators, an Acting General
Manager and/or Project Supervisor for a cooperative where
vacancies in the said positions occur and/or when the interest of
the cooperative or the program so requires, and to prescribe the
functions of the said Acting General Manager and/or Project
Supervisor, which powers shall not be nullified, altered or
diminished by any policy or resolution of the Board of Directors of
the cooperative concerned;[18]
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
b) the NEA is given the power of supervision and control over
electric cooperatives and pursuant to such powers, NEA may issue
orders, rules and regulations motu propio or upon petition of third
parties to conduct referenda and other similar actions in all
matters affecting electric cooperatives;[19]
c) No cooperative shall borrow money from any source without
the approval of the Board of Administrators of the NEA;[20] and
d) The management of a cooperative shall be vested in its Board,
subject to the supervision and control of NEA which shall have the
right to be represented and to participate in all Board meetings
and deliberations and to approve all policies and resolutions.[21]
The extent of government control over electric cooperatives
covered by P.D. No. 269, as amended, is largely a function of the
role of the NEA as a primary source of funds of these electric
cooperatives. It is crystal clear that NEA incurred loans from
various sources to finance the development and operations of the
electric cooperatives. Consequently, amendments to P.D. No. 269
were primarily geared to expand the powers of the NEA over the
electric cooperatives to ensure that loans granted to them would
be repaid to the government. In contrast, cooperatives under R.A.
No. 6938 are envisioned to be self-sufficient and independent
organizations with minimal government intervention or regulation.
To be sure, the transitory provisions of R.A. No. 6938 are
indicative of the recognition by Congress of the fundamental
distinctions between electric cooperatives organized under P.D No.
269, as amended, and cooperatives under the new Cooperative
Code. Article 128 of the Cooperative Code provides that all
cooperatives registered under previous laws shall be deemed
registered with the CDA upon submission of certain requirements
within one year. However, cooperatives created under P.D. No.
269, as amended, are given three years within which to qualify
and register with the CDA, after which, provisions of P.D. No. 1645
which expand the powers of the NEA over electric cooperatives,
would no longer apply.[22]
Second, the classification of tax-exempt entities in the Local
Government Code is germane to the purpose of the law. The
Constitutional mandate that every local government unit shall
enjoy local autonomy, does not mean that the exercise of power
by local governments is beyond regulation by Congress. Thus,
while each government unit is granted the power to create its own
sources of revenue, Congress, in light of its broad power to tax,
has the discretion to determine the extent of the taxing powers of
local government units consistent with the policy of local
autonomy.[23]
Section 193 of the Local Government Code is indicative of the
legislative intent to vest broad taxing powers upon local
government units and to limit exemptions from local taxation to
entities specifically provided therein. Section 193 provides:
Section 193. Withdrawal of Tax Exemption Privileges.Unless
otherwise provided in this Code, tax exemptions or incentives
granted to, or presently enjoyed by all persons, whether natural or
juridical, including government-owned and controlled corporations,
except local water districts, cooperatives duly registered under
R.A. No. 6938, non-stock and non-profit hospitals and educational
institutions, are hereby withdrawn upon the effectivity of this
Code.[24]
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
The above provision effectively withdraws exemptions from local
taxation enjoyed by various entities and organizations upon
effectivity of the Local Government Code except for a) local water
districts; b) cooperatives duly registered under R.A. No. 6938; and
c) non-stock and non-profit hospitals and educational institutions.
Further, with respect to real property taxes, the Local Government
Code again specifically enumerates entities which are exempt
therefrom and withdraws exemptions enjoyed by all other entities
upon the effectivity of the code.
In Mactan Cebu International Airport Authority v. Marcos,[26] this
Court held that the limited and restrictive nature of the tax
exemption privileges under the Local Government Code is
consistent with the State policy to ensure autonomy of local
governments and the objective of the Local Government Code to
grant genuine and meaningful autonomy to enable local
government units to attain their fullest development as self-reliant
communities and make them effective partners in the attainment
of national goals. The obvious intention of the law is to broaden
the tax base of local government units to assure them of
substantial sources of revenue.
While we understand petitioners predicament brought about by
the withdrawal of their local tax exemption privileges under the
Local Government Code, it is not the province of this Court to go
into the wisdom of legislative enactments. Courts can only
interpret laws. The principle of separation of powers prevents
them from re-inventing the laws.
Finally, Sections 193 and 234 of the Local Government Code
permit reasonable classification as these exemptions are not
limited to existing conditions and apply equally to all members of
the same class. Exemptions from local taxation, including real
property tax, are granted to all cooperatives covered by R.A. No.
6938 and such exemptions exist for as long as the Local
Government Code and the provisions therein on local taxation
remain good law.
ADVICE OF SC: Their remedy, however, is not judicial. Striking
down Sections 193 and 234 of the Local Government Code as
unconstitutional or declaring them inapplicable to petitioners is not
the proper course of action for them to obtain their previous tax
exemptions. The language of the law and the intention of its
framers are clear and unequivocal and courts have no other duty
except to uphold the law. The task to re-examine the rules and
guidelines on the conversion of electric cooperatives to
cooperatives under R.A. No. 6938 and provide every assistance
available to them should be addressed by the proper authorities of
government. This is necessary to encourage the growth and
viability of cooperatives as instruments of social justice and
economic development.
*stories about TADECO(?)* So it is only the Coops registered with
the CDA entitled to RPT exemption.
(e) Machinery and equipment used for pollution control and
environmental protection.
Except as provided herein, any exemption from payment of real
property tax previously granted to, or presently enjoyed by, all
persons, whether natural or juridical, including all government-
owned or controlled corporations are hereby withdrawn upon the
effectivity of this Code.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
Section 207. Real Property Identification System. - All declarations
of real property made under the provisions of this Title shall be
kept and filed under a uniform classification system to be
established by the provincial, city or municipal assessor.
Section 208. Notification of Transfer of Real Property Ownership. -
Any person who shall transfer real property ownership to another
shall notify the provincial, city or municipal assessor concerned
within sixty (60) days from the date of such transfer. The
notification shall include the mode of transfer, the description of
the property alienated, the name and address of the transferee.
So kung magbenta ka nag real property, you are the seller, you
have the obligation under 208 na you will include or inform the
assessor concerned within sixty (60) days from the date of such
transfer. Does the seller do that? No. But that is the provision.
Anyway, its not penal in nature.
Section 209. Duty of Registrar of Deeds to Appraise Assessor of
Real Property Listed in Registry. -
(a) To ascertain whether or not any real property entered in the
Registry of Property has escaped discovery and listing for the
purpose of taxation, the Registrar of Deeds shall prepare and
submit to the provincial, city or municipal assessor, within six (6)
months from the date of effectivity of this Code and every year
thereafter, an abstract of his registry, which shall include brief but
sufficient description of the real properties entered therein, their
present owners, and the dates of their most recent transfer or
alienation accompanied by copies of corresponding deeds of sale,
donation, or partition or other forms of alienation.
The assessor deals with real property, and you have ROD dealing
with real properties. Sino bang mas updated? So it seems under
209 mas updated ang ROD. The ROD will have that duty to
apprise the assessor registered in his registry because if not
reconciled kung magkaroon ng comparison, then sa record ng
assessor the property there listed under that owner and the
records with the ROD, he is no longer the owner and you have a
new owner. So you have that requirement in 209 to apprise the
assessor in the updates in the ROD.
(b) It shall also be the duty of the Registrar of Deeds to require
every person who shall present for registration a document of
transfer, alienation, or encumbrance of real property to
accompany the same with a certificate to the effect that the real
property subject of the transfer, alienation, or encumbrance, as
the case may be, has been fully paid of all real property taxes due
thereon. Failure to provide such certificate shall be a valid cause
for the Registrar of Deeds to refuse the registration of the
document.
After you have been issued a new title, the office of the ROD will
advise it is the duty of the ROD to tell the new owner to go to
the assessor so that the tax declaration there will be updated. You
bring your new title so that it will be updated in the declaration.
Section 210. Duty of Official Issuing Building Permit or Certificate
of Registration of Machinery to Transmit Copy to Assessor. - Any
public official or employee who may now or hereafter be required
by law or regulation to issue to any person a permit for the
construction, addition, repair, or renovation of a building, or
permanent improvement on land, or a certificate of registration for
any machinery, including machines, mechanical contrivances, and
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
apparatus attached or affixed on land or to another real property,
shall transmit a copy of such permit or certificate within thirty (30)
days of its issuance, to the assessor of the province, city or
municipality where the property is situated.
When you want to construct a building, or install machinery or
equipment, you cannot just do that without the building permit or
certificate of registration of machinery.
Once the building is completed and you back and ask for a
certificate of completion. Kasi yung building permit na sinubmit
niyo doon sa assessor will just be for record purposes, it will not
alter your tax declaration; what will alter is the completion of the
building. Now, a new declaration of the building will not be issued
unless there is a certificate of occupancy or a certificate of
completion. So when your building is completed, you go back to
the city building office and you ask for certificate of occupancy or
a certificate of completion.
Now before issuance of the certificate, the building office will go to
your building and inspect. Once they are satisfied, they will issue
you the certificate of completion, or certificate of occupancy, then
that certificate you will bring to your assessor so that your
declaration will be adjusted for whatever building or machinery
you have constructed or installed.
Section 211. Duty of Geodetic Engineers to Furnish Copy of Plans
to Assessor. - It shall be the duty of all geodetic engineers, public
or private, to furnish free of charge to the assessor of the
province, city or municipality where the land is located with a
white or blue print copy of each of all approved original or
subdivision plans or maps of surveys executed by them within
thirty (30) days from receipt of such plans from the Lands
Management Bureau, the Land Registration Authority, or the
Housing and Land Use Regulatory Board, as the case may be.
*gibasa lang ni Dean*
February 5, 2015
NO CLASS!
February 10, 2015
We are already in real property taxation (RPT). Things you have in
mind on RPT are matters with the concept on what will constitute
real properties. The real properties we know of for all legal intents
and purposes are not only land, or immovables attached to the
ground. We have also discussed immovable by destination, so you
have these concepts and things which are to be considered
immovables for purposes of RPT.
From there, once you know what will constitute or compose to be
taxable real properties, is on the matter on the appraisal and
assessment of real properties, then classification, then we move
on to the manner they are being taxed- what is the tax base for
real properties and this is on the basis of assessed value.
How is the classification determined?
On the basis of actual use, do not be confused whether it
is for exemption or taxation it will always be actual use
as the basis.
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 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
From there, we move on now to the procedural aspect. What are
the rules when you want to question or challenge the assessment
made by the assessor. And then you also have the procedure
within which in the event that it is agreed with the city treasurer,
kinomputan ka na ng RPT and you would protest over the manner
it was arrived at, may remedy and procedure din jan within which
you would like to question the manner of the computation of the
RPT. So we go to the substantive as well as procedural.
So from the last time where we were in RPT, we stopped at 211,
this is:
Section 211. Duty of Geodetic Engineers to Furnish Copy of Plans
to Assessor. - It shall be the duty of all geodetic engineers, public
or private, to furnish free of charge to the assessor of the
province, city or municipality where the land is located with a
white or blue print copy of each of all approved original or
subdivision plans or maps of surveys executed by them within
thirty (30) days from receipt of such plans from the Lands
Management Bureau, the Land Registration Authority, or the
Housing and Land Use Regulatory Board, as the case may be.
This is just a procedural requirement that when surveyors or
geodetic engineers would make plans or surveys or a subdivision
plan or map or survey, then they are required to furnish copies of
such plans to the Lands Management Bureau, the Land
Registration Authority, or the Housing and Land Use Regulatory
Board, as the case may be.
Section 212. Preparation of Schedule of Fair Market Values. -
Before any general revision of property assessment is made
pursuant to the provisions of this Title, there shall be prepared a
schedule of fair market values by the provincial, city and municipal
assessor of the municipalities within the Metropolitan Manila Area
for the different classes of real property situated in their respective
local government units for enactment by ordinance of the
sanggunian concerned.
Now this work is done by the assessors office because what is
valuable, or for purposes of fiscal adequacy, the matter that would
change every now and then is the fair market value (FMV)
because the assessed value (AV) is determined:
AV = FMV x assessment level
And the assessment level is that percentage that would determine
the taxable value. The assessed value is the taxable value. So this
is the tax base. The RPT is determined based on:
RPT = AV x rate
So ang nagbabago is the FMV, the assessed value will vary
depending on what will be the market value because the
assessment level is fixed. When we go to the assessment level,
the percentage there depending on the land classification is
provided for by law. Again, all these provisions have to be
embodied in an ordinance so that this can be done by the LGU.
Section 218. Assessment Levels. - The assessment levels to be
applied to the fair market value of real property to determine its
assessed value shall be fixed by ordinances of the sangguniang
panlalawigan, sangguniang panlungsod or sangguniang bayan of a
municipality within the Metropolitan Manila Area, at the rates not
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
exceeding the following:
(a) On Lands:
CLASS ASSESSMENT LEVELS
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%
Illustration: Assessed value = 20,000
The RPT will be based on the P20,000 x the rate (say 2% for the
regular cities). So 400. So this is the RPT in 2005.
In 2010, lets say. The assessor, for purposes of fiscal adequacy
updated the FMV because through time real property will
appreciate and it will be unrealistic and conservative on the part of
the LGU if they will not update the FMV. Talo sila jan, lugi ang
LGU, how could they generate collection if they are still using 2005
valuation which I already 2010. So unrealistic now.
So every now and then, we have this provision that there is a
flexibility provision within which the LGU may revise and increase
the FMV. Thats why theres 212.
So before any general revision of property assessment is made,
there shall be prepared a schedule of fair market values by the
provincial, city and municipal assessor OR enactment by ordinance
of the sanggunian concerned because the assessor cannot make
on his own yung FMV. To whose authority ba siya na sasabi na
may ganon, so he has to make that proposal and submit that to
the sanggunian because the Sanggu will not just take on face
value ano yung sinubmit ng assessor. It will go thru a public
hearing. A zoning ordinance will be made that itong area na ito
maging commercial, the interior will be agricultural, etc. So there
will be some kind of zonification.
So property values will also change. Lets say by reason of that
ordinance, the FMV of the residential land used to be 100k, will
now be 180k. So magbago yung FMV so that land has then in
2005 100k, in 2010 180k na, times the assessment level for
residential lands. So the RPT will be 36k times 2% = 720. From
400, umakyat na to 720, so may increase na in revenue by 320.
So thats the way you would increase your property tax collection
aside from enforcement because not all are serious really to pay
real property tax or they dont pay unless sisingilin.
So you have this preparation in 212 for the schedule of FMV.
The schedule of fair market values shall be published in a
newspaper of general circulation in the province, city or
municipality concerned or in the absence thereof, shall be posted
in the provincial capitol, city or municipal hall and in two other
conspicuous public places therein.
Then
Section 213. Authority of Assessor to Take Evidence. - For the
purpose of obtaining information on which to base the market
value of any real property, the assessor of the province, city or
municipality or his deputy may summon the owners of the
Page 72
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015
properties to be affected or persons having legal interest therein
and witnesses, administer oaths, and take deposition concerning
the property, its ownership, amount, nature, and value.
So this is a procedure in the event that there is a controversy in
valuation, then the landowner is given the opportunity for due
process, allowing him to present otherwise.
Thats also the same procedure when the landowner would insist
that he is also exempted, the exempted owner to prove that the
real property is entitled to exemption.
Section 214. Amendment of Schedule of Fair Market Values. - The
provincial, city or municipal assessor may recommend to the
sanggunian concerned amendments to correct errors in valuation
in the schedule of fair market values. The sanggunian concerned
shall, by ordinance, act upon the recommendation within ninety
(90) days from receipt thereof.
And then you have *binasa lang ni dean ang codal*
Section 215. Classes of Real Property for Assessment Purposes. -
For purposes of assessment, real property shall be classified as
residential, agricultural, commercial, industrial, mineral, timberland
or special.
The city or municipality within the Metropolitan Manila Area,
through their respective sanggunian, shall have the power to
classify lands as residential, agricultural, commercial, industrial,
mineral, timberland, or special in accordance with their zoning
ordinances.
Section 216. Special Classes of Real Property. - All lands, buildings,
and other improvements thereon actually, directly and exclusively
used for hospitals, cultural, or scientific purposes, and those
owned and used by local water districts, and government-owned
or controlled corporations rendering essential public services in the
supply and distribution of water and/or generation and
transmission of electric power shall be classified as special.
So there is also a special rate for them, they have lower rates:
(d) On Special Classes: The assessment levels for all lands
buildings, machineries and other improvements;
Actual Use Assessment Level
Cultural 15%
Scientific 15%
Hospital 15%
Local water districts 10%
Government-owned
or controlled corporations
engaged in the supply
and distribution of water 10%
and/or generation and
transmission of electric
power
Now, in the case of 216, there is this case in Cebu, the case of
Nebola(?). This is the corporation which runs the Chong Hua
Hospital, a hospital in Cebu. So Chong Hua Hospital because of the
difficulty to get lands in downtown Cebu, it was able to buy land of
ample distance from the main hospital. So they set up a medical
arts center. When it was finished, the hospital was used as clinics
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
of the doctors of the CHH. So some clinics in the hospitals were
also set-up in that medical center. However, the city of Cebu
assessed that building as commercial, and being a commercial in
218, it will have an assessment level of 50%, it was not given
anymore a category or a special class kasi medyo malayo na. So it
went up to the Supreme Court because the Nebola Cebu
challenged the assessment because it was still being used as a
special class of real property because it was being used as clinics
for the doctors.
The SC sided with the hospital. Despite the distance, precisely why
the hospital was built so that the clinic of the doctors will be near-
by the hospital and the doctors doing medical work at the hospital
will have their clinic just a little distance from the hospital. And you
also have offices of the hospital located in the building also. So it
should also enjoy the same classification as hospitals because of
the actual use. Despite the distance, it was the actual use of the
medical arts center which is the basis of the classification and it
would still be a special class of real property entitled to that
assessment levelof 15%.
Like what you have there with San Pedro na may bridge So yan,
hindi mo yan maipagkakaila na thats part and parcel of the
hospital complex because of the bridge. The same way ou would
notice also Medical City, so that connects and makes it a hospital
complex and that would make it enjoy the assessment level as a
hospital, otherwise, its commercial and its subject to 50% higher
assessment level.
Section 217. Actual Use of Real Property as Basis for Assessment.
- Real property shall be classified, valued and assessed on the
basis of its actual use regardless of where located, whoever owns
it, and whoever uses it.
Section 218. Assessment Levels. - The assessment levels to be
applied to the fair market value of real property to determine its
assessed value shall be fixed by ordinances of the sangguniang
panlalawigan, sangguniang panlungsod or sangguniang bayan of a
municipality within the Metropolitan Manila Area, at the rates not
exceeding the following:
So depending on the classes: *binasa lang ni Dean*
*please refer to your codals, pangit ang formatting, sorry. *
(a) On Lands:
CLASS ASSESSMENT LEVELS
Residential 20%
Agricultural 40%
Commercial 50%
Industrial 50%
Mineral 50%
Timberland 20%
(b) On Buildings and Other Structures:
(1) Residential
Fair market Value
Over Not Over Assessment Levels
P175,000.00 0%
P175,000.00 300,000.00 10%
300,000.00 500,000.00 20%
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500,000.00 750,000.00 25% two (2) years after the effectivity of this Code and every three
750,000.00 1,000,000.00 30% (3) years thereafter.
1,000,000.00 2,000,000.00 35%
2,000,000.00 5,000,000.00 40% For purposes again of fiscal adequacy, assessments and property
5,000,000.00 10,000,000.00 50% classifications have to be revised because the use will change thru
10,000,000.00 time. Perhaps in this area 10 years ago residential yan siya and
60% after 20 years the area becomes now commercial. So there will be
revisions of assessments and property classification. In 219 you
(2) Agricultural will see how often.
Fair Market Value
Over Not Over Assessment Levels Section 220. Valuation of Real Property. - In cases where (a) real
P300,000.00 property is declared and listed for taxation purposes for the first
25% time; (b) there is an ongoing general revision of property
P300,000.00 500,000.00 30% classification and assessment; or (c) a request is made by the
500,000.00 750,000.00 35% person in whose name the property is declared, the provincial, city
750,000.00 1,000,000.00 40% or municipal assessor or his duly authorized deputy shall, in
1,000,000.00 2,000,000.00 45% accordance with the provisions of this Chapter, make a
2,000,000.00 classification, appraisal and assessment or taxpayer's valuation
50% thereon: Provided, however, That the assessment of real property
shall not be increased oftener than once every three (3) years
(3) Commercial / Industrial except in case of new improvements substantially increasing the
Fair Market Value value of said property or of any change in its actual use.
Over Not Over Assessment Levels
P300,000.00 Now in valuation, also, how often do you do the valuation? Once
30% every 3 years
P300,000.00 500,000.00 35%
500,000.00 750,000.00 40% Section 221. Date of Effectivity of Assessment or Reassessment. -
750,000.00 1,000,000.00 50% All assessments or reassessments made after the first (1st) day of
1,000,000.00 2,000,000.00 60% January of any year shall take effect on the first (1st) day of
2,000,000.00 5,000,000.00 70% January of the succeeding year: Provided, however, That the
5,000,000.00 10,000,000.00 75% reassessment of real property due to its partial or total
10,000,000.00 destruction, or to a major change in its actual use, or to any great
80% and sudden inflation or deflation of real property values, or to the
(4) Timberland gross illegality of the assessment when made or to any other
Fair Market Value abnormal cause, shall be made within ninety (90) days from the
Over Not Over Assessment Levels date any such cause or causes occurred, and shall take effect at
P300,000.00 45% the beginning of the quarter next following the reassessment.
P300,000.00 500,000.00 50%
500,000.00 750,000.00 55% IN case there is an assessment or reassessment, effectivity is
750,000.00 1,000,000.00 60% different in local tax. In local tax, usually the effectvitiy and
5,000,000.00 2,000,000.00 65% accrual will take effect on the 1st day of the quarter next following
2,000,000.00 70% the effectivity of the ordinance.

(c) On Machineries In the case of RPT, it will be declared in the following year. So
Class Assessment Levels anything done during the year, in 2014, ang effectivity niyan will
Agricultural 40% not be that of local tax. It will be on January 1 of the following
Residential 50% year because the RPT is usually collected or accrue on the 1 st day
Commercial 80% of January of each year.
Industrial 80%
Section 222. Assessment of Property Subject to Back Taxes. - Real
(d) On Special Classes: The assessment levels for all lands property declared for the first time shall be assessed for taxes for
buildings, machineries and other improvements; the period during which it would have been liable but in no case of
Actual Use Assessment Level more than ten (10) years prior to the date of initial assessment:
Cultural 15% Provided, however, That such taxes shall be computed on the
Scientific 15% basis of the applicable schedule of values in force during the
Hospital 15% corresponding period.
Local water districts 10%
Government-owned or controlled corporations engaged in the If such taxes are paid on or before the end of the quarter
supply and distribution of water and/or generation and following the date the notice of assessment was received by the
transmission of electric power 10% owner or his representative, no interest for delinquency shall be
imposed thereon; otherwise, such taxes shall be subject to an
Section 219. General Revision of Assessment and Property interest at the rate of two percent (2%) per month or a fraction
Classification. - The provincial, city or municipal assessor shall thereof from the date of the receipt of the assessment until such
undertake a general revision of real property assessments within taxes are fully paid.
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III Manresa 2014 - 2015
Section 223. Notification of New or Revised Assessment. - When
real property is assessed for the first time or when an existing
assessment is increased or decreased, the provincial, city or
municipal assessor shall within thirty (30) days give written notice
of such new or revised assessment to the person in whose name
the property is declared. The notice may be delivered personally or
by registered mail or through the assistance of the punong
barangay to the last known address of the person to be served.
Section 224. Appraisal and Assessment of Machinery. -
(a) The fair market value of a brand-new machinery shall be the
acquisition cost. In all other cases, the fair market value shall be
determined by dividing the remaining economic life of the
machinery by its estimated economic life and multiplied by the
replacement or reproduction cost.
(b) If the machinery is imported, the acquisition cost includes
freight, insurance, bank and other charges, brokerage, arrastre
and handling, duties and taxes, plus charges at the present site.
The cost in foreign currency of imported machinery shall be
converted to peso cost on the basis of foreign currency exchange
rates as fixed by the Central Bank.
*binasa lang*
Section 225. Depreciation Allowance for Machinery. - For purposes
of assessment, a depreciation allowance shall be made for
machinery at a rate not exceeding five percent (5%) of its original
cost or its replacement or reproduction cost, as the case may be,
for each year of use: Provided, however, That the remaining value
for all kinds of machinery shall be fixed at not less than twenty
percent (20%) of such original, replacement, or reproduction cost
for so long as the machinery is useful and in operation.
For accounting purposes, the owner may have a different
depreciation method in depreciating the machineries. But for RPT
purpose, the depreciation rate is fixed.
Why is that so? Because machineries are wildly used so
depreciation is considered for purposes of coming up with the FMV
to arrive at what we call the AV for RPT.
Then we have the procedural aspect, the assessment appeals.
So these are uniform proceedings for any matter involving RPT.
You would notice in local tax we encountered different sets of
procedures, if you would challenge the legality of the tax
ordinance, the procedure is:
Bring it to DOJ the Secretary will decide
DOJ to RTC
RTC to CTA
Then to the SC
Then you also have procedure for local tax assessments:
Notice of assessment is given to the local taxpayer
Remedy of tax payer is protest notice of assessment
from your local treasurer
Once the local taxpayer receives the notice *kusog
kaayog ubo si Carizza Joy Gonzales * collect the
protest(?)
Then in the hands now of the local treasurer, he will
decide whether to grant or deny the protest.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
If denied, goes to regular courts, depending on the
jurisdictional amount RTC or MTC.
Then it goes thru the entire process in the Rules of Court
except that after the RTC doon na yan sa CTA.
CTA SC
If MTC, RTC CTA SC
Likewise, another procedure in local tax is a claim for refund:
Where the local taxpayer files a claim for refund with the
local treasurer.
The local treasurer decides to grant or deny
Depending again the jurisidcitonal amount in case of
denial, MTC or RTC where the local taxpayer may bring
an appeal once denied or before the lapse of the 2 year
prescriptive period the local treasurer has not decided,
he may bring it up to the regular courts
So you have the same thing, MTC (original jurisdiction)
RTC CTA SC; RTC (original) CTA SC
Now in RPT, there is another set of procedure involving matters on
RPT.
Section 226. Local Board of Assessment Appeals.
Any owner or person:
having legal interest in the property
who is not satisfied with the action of the provincial, city
or municipal assessor in the assessment of his property
may, within sixty (60) days from the date of receipt of
the written notice of assessment, appeal to the Board of
Assessment Appeals of the provincial or city
by filing:
o a petition under oath in the form prescribed for
the purpose,
o together with copies of the tax declarations and
such affidavits or documents submitted in
support of the appeal.
So the issue involves what we call protesting the assessment.
Now, take note that the assessment in local taxation has a
different meaning than assessment in RPT. In RPT, it is the
appraisal and FMV of the property kasi doon sila gumagawa ng
controversy. The assessors assesses the FMV na ganito, the
owner says otherwise, so sino ba nag masususnod dito. Soeven if
the property owner would submit evidence to rebut the claim of
the assessor, and the assessor would say na ito pa rin ang aking
valuation, so ano ang remedy ng owner? So you have a case of
protesting assessments.
So when there is a disagreement or controversy involving the
valuation of real property, so your remedy is to file this petition
where the local board of assessment is. IN every city or province,
there is a local board located. So when the assessor says na ito
yung aking valuation, your remedy is not to file an MR but to file
go to the local board of assessment. That is the procedure which
Fels Energy did in Fels Energy v. Local Board of Assessment.
G.R. No. 168557 February 16, 2007
FELS ENERGY, INC., Petitioner,
vs. THE PROVINCE OF BATANGAS and THE OFFICE OF THE
PROVINCIAL ASSESSOR OF BATANGAS, Respondents.
x----------------------------------------------------x
G.R. No. 170628 February 16, 2007
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NATIONAL POWER CORPORATION, Petitioner,
vs. LOCAL BOARD OF ASSESSMENT APPEALS OF
BATANGAS, LAURO C. ANDAYA, in his capacity as the
Assessor of the Province of Batangas, and the PROVINCE
OF BATANGAS represented by its Provincial Assessor,
Respondents.
Held: Section 226 of R.A. No. 7160, otherwise known as the Local
Government Code of 1991, provides:
SECTION 226. Local Board of Assessment Appeals. Any owner or
person having legal interest in the property who is not satisfied
with the action of the provincial, city or municipal assessor in the
assessment of his property may, within sixty (60) days from the
date of receipt of the written notice of assessment, appeal to the
Board of Assessment Appeals of the province or city by filing a
petition under oath in the form prescribed for the purpose,
together with copies of the tax declarations and such affidavits or
documents submitted in support of the appeal.
We note that the notice of assessment which the Provincial
Assessor sent to FELS on August 7, 1995, contained the following
statement:
If you are not satisfied with this assessment, you may, within sixty
(60) days from the date of receipt hereof, appeal to the Board of
Assessment Appeals of the province by filing a petition under oath
on the form prescribed for the purpose, together with copies of
ARP/Tax Declaration and such affidavits or documents submitted
in support of the appeal.32
Instead of appealing to the Board of Assessment Appeals (as
stated in the notice), NPC opted to file a motion for
reconsideration of the Provincial Assessors decision, a remedy not
sanctioned by law.
The remedy of appeal to the LBAA is available from an adverse
ruling or action of the provincial, city or municipal assessor in the
assessment of the property. It follows then that the determination
made by the respondent Provincial Assessor with regard to the
taxability of the subject real properties falls within its power to
assess properties for taxation purposes subject to appeal before
the LBAA.33
We fully agree with the rationalization of the CA in both CA-G.R.
SP No. 67490 and CA-G.R. SP No. 67491. The two divisions of the
appellate court cited the case of Callanta v. Office of the
Ombudsman,34 where we ruled that under Section 226 of R.A. No
7160,35 the last action of the local assessor on a particular
assessment shall be the notice of assessment; it is this last action
which gives the owner of the property the right to appeal to the
LBAA. The procedure likewise does not permit the property owner
the remedy of filing a motion for reconsideration before the local
assessor. The pertinent holding of the Court in Callanta is as
follows:
x x x [T]he same Code is equally clear that the aggrieved owners
should have brought their appeals before the LBAA. Unfortunately,
despite the advice to this effect contained in their respective
notices of assessment, the owners chose to bring their requests
for a review/readjustment before the city assessor, a remedy not
sanctioned by the law. To allow this procedure would indeed invite
corruption in the system of appraisal and assessment. It
conveniently courts a graft-prone situation where values of real
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
property may be initially set unreasonably high, and then
subsequently reduced upon the request of a property owner. In
the latter instance, allusions of a possible covert, illicit trade-off
cannot be avoided, and in fact can conveniently take place. Such
occasion for mischief must be prevented and excised from our
system.36
For its part, the appellate court declared in CA-G.R. SP No. 67491:
x x x. The Court announces: Henceforth, whenever the local
assessor sends a notice to the owner or lawful possessor of real
property of its revised assessed value, the former shall no longer
have any jurisdiction to entertain any request for a review or
readjustment. The appropriate forum where the aggrieved party
may bring his appeal is the LBAA as provided by law. It follows
ineluctably that the 60-day period for making the appeal to the
LBAA runs without interruption. This is what We held in SP 67490
and reaffirm today in SP 67491.37
To reiterate, if the taxpayer fails to appeal in due course, the right
of the local government to collect the taxes due with respect to
the taxpayers property becomes absolute upon the expiration of
the period to appeal.38 It also bears stressing that the taxpayers
failure to question the assessment in the LBAA renders the
assessment of the local assessor final, executory and demandable,
thus, precluding the taxpayer from questioning the correctness of
the assessment, or from invoking any defense that would reopen
the question of its liability on the merits.39
In fine, the LBAA acted correctly when it dismissed the petitioners
appeal for having been filed out of time; the CBAA and the
appellate court were likewise correct in affirming the dismissal.
Elementary is the rule that the perfection of an appeal within the
period therefor is both mandatory and jurisdictional, and failure in
this regard renders the decision final and executory.40
So ano tong local board? *binasa lang ni Dean*
Section 227. Organization, Powers, Duties, and Functions of the
Local Board of Assessment Appeals. -
(a) The Board of Assessment Appeals of the province or city shall
be composed of the Registrar of Deeds, as Chairman, the
provincial or city prosecutor and the provincial, or city engineer as
members, who shall serve as such in an ex officio capacity without
additional compensation.
(b) The chairman of the Board shall have the power to designate
any employee of the province or city to serve as secretary to the
Board also without additional compensation.
(c) The chairman and members of the Board of Assessment
Appeals of the province or city shall assume their respective
positions without need of further appointment or special
designations immediately upon effectivity of this Code. They shall
take oath or affirmation of office in the prescribed form.
(d) In provinces and cities without a provincial or city engineer,
the district engineer shall serve as member of the Board. In the
absence of the Registrar of Deeds, or the provincial or city
prosecutor, or the provincial or city engineer, or the district
engineer, the persons performing their duties, whether in an
acting capacity or as a duly designated officer-in-charge, shall
automatically become the chairman or member, respectively, of
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III Manresa 2014 - 2015
the said Board, as the case may be.
Section 228. Meetings and Expenses of the Local Board of
Assessment Appeals. -
(a) The Board of Assessment Appeals of the province or city shall
meet once a month and as often as may be necessary for the
prompt disposition of appealed cases. No member of the Board
shall be entitled to per diems or traveling expenses for his
attendance in Board meetings, except when conducting an ocular
inspection in connection with a case under appeal.
(b) All expenses of the Board shall be charged against the general
fund of the province or city, as the case may be. The sanggunian
concerned shall appropriate the necessary funds to enable the
Board in their respective localities to operate effectively.
Section 229. Action by the Local Board of Assessment Appeals.
(a) The Board shall decide the appeal within one hundred twenty
(120) days from the date of receipt of such appeal. The Board,
after hearing, shall render its decision based on substantial
evidence or such relevant evidence on record as a reasonable
mind might accept as adequate to support the conclusion.
(b) In the exercise of its appellate jurisdiction, the Board shall
have the power to summon witnesses, administer oaths, conduct
ocular inspection, take depositions, and issue subpoena and
subpoena duces tecum. The proceedings of the Board shall be
conducted solely for the purpose of ascertaining the facts without
necessarily adhering to technical rules applicable in judicial
proceedings.
(c) The secretary of the Board shall furnish the owner of the
property or the person having legal interest therein and the
provincial or city assessor with a copy of the decision of the Board.
In case the provincial or city assessor concurs in the revision or
the assessment, it shall be his duty to notify the owner of the
property or the person having legal interest therein of such fact
using the form prescribed for the purpose. The owner of the
property or the person having legal interest therein or the assessor
who is not satisfied with the decision of the Board, may, within
thirty (30) days after receipt of the decision of said Board, appeal
to the Central Board of Assessment Appeals, as herein provided.
The decision of the Central Board shall be final and executory.
So you have the local board, it makes a decision whether to grant
or deny. In case of denial, you now bring it to the central board of
assessment appeals.
Section 230. Central Board of Assessment Appeals. - The Central
Board of Assessment Appeals shall be composed of a chairman,
and two (2) members to be appointed by the President, who shall
serve for a term of seven (7) years, without reappointment. Of
those first appointed, the chairman shall hold office for seven (7)
years, one member for five (5) years, and the other member for
three (3) years. Appointment to any vacancy shall be only for the
unexpired portion of the term of the predecessor. In no case shall
any member be appointed or designated in a temporary or acting
capacity. The chairman and the members of the Board shall be
Filipino citizens, at least forty (40) years old at the time of their
appointment, and members of the Bar or Certified Public
Accountants for at least ten (10) years immediately preceding their
appointment. The chairman of the Board of Assessment Appeals
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
shall have the salary grade equivalent to the rank of Director III
under the Salary Standardization Law exclusive of allowances and
other emoluments. The members of the Board shall have the
salary grade equivalent to the rank of Director II under the Salary
Standardization Law exclusive of allowances and other
emoluments. The Board shall have appellate jurisdiction over all
assessment cases decided by the Local Board of Assessment
Appeals.
There shall be Hearing Officers to be appointed by the Central
Board of Assessment Appeals pursuant to civil service laws, rules
and regulations, one each for Luzon, Visayas and Mindanao, who
shall hold office in Manila, Cebu City and Cagayan de Oro City,
respectively, and who shall serve for a term of six (6) years,
without reappointment until their successors have been appointed
and qualified. The Hearing Officers shall have the same
qualifications as that of the Judges of the Municipal Trial Courts.
The Central Board Assessment Appeals, in the performance of its
powers and duties, may establish and organize staffs, offices,
units, prescribe the titles, functions and duties of their members
and adopt its own rules and regulations.
Unless otherwise provided by law, the annual appropriations for
the Central Board of Assessment Appeals shall be included in the
budget of the Department of Finance in the corresponding General
Appropriations Act.
So the CBAA will now review the appeal of the property owner. If
it will be against the owner of the property or person having
custody or the assessor who is not satisfied with the decision,
aakyat sa CBAA.
Now from the CBAA, they may grant or deny the appeal. In case
of denial, it is now brought to the CTA, then from CTA to SC. Here,
remember rule 43:
RULE 43
Appeals From the Court of Tax Appeals and Quasi-Judicial
Agencies to the Court of Appeals
Section 1. Scope. This Rule shall apply to appeals from
judgments or final orders of the Court of Tax Appeals and from
awards, judgments, final orders or resolutions of or authorized by
any quasi-judicial agency in the exercise of its quasi-judicial
functions. Among these agencies are the Civil Service Commission,
Central Board of Assessment Appeals, Securities and Exchange
Commission, Office of the President, Land Registration Authority,
Social Security Commission, Civil Aeronautics Board, Bureau of
Patents, Trademarks and Technology Transfer, National
Electrification Administration, Energy Regulatory Board, National
Telecommunications Commission, Department of Agrarian Reform
under Republic Act No. 6657, Government Service Insurance
System, Employees Compensation Commission, Agricultural
Invention Board, Insurance Commission, Philippine Atomic Energy
Commission, Board of Investments, Construction Industry
Arbitration Commission, and voluntary arbitrators authorized by
law. (n)
In the case of NLRC, you bring it up thru rule 65. In rule 43,
among the QJ bodies mentioned here is CBAA. So take note of the
provision in 229: The decision of the Central Board shall be final
and executory because otherwise if it is final and executory, it
should be under rule 65. But that has been clarified in rule 43,
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III Manresa 2014 - 2015
which is the later interpretation of 230 because the rule there that
decisions of the CBAA already says that it is appealed to the CTA
by way of Petition for Review.
Section 231. Effect of Appeal on the Payment of Real Property
Tax. - Appeal on assessments of real property made under the
provisions of this Code shall, in no case, suspend the collection of
the corresponding realty taxes on the property involved as
assessed by the provincial or city assessor, without prejudice to
subsequent adjustment depending upon the final outcome of the
appeal.
Now, during the pendency of these proceedings, what will happen
to the collection?
Tuloy pa rin, hindi masuspend.
Ano yung valuation na gagamitin nila?
The assessors valuation. Yun yung masunod muna. If
later on it will be finally decided that it is the valuation of
the property owner which shall be followed, then there
will be no adjustments. Tax credits may be granted or
you can ask for a refund.
February 12, 2015
Briefly going back to our discussion last time, we have the matter
on the appearance of the procedure or what we call the
taxpayers remedies under real property tax.
You have the matter involving protesting assessment. So any
matter involving issue on valuation of real property where
there is controversy over valuation between the owner and
the assessor, the remedy of the owner who would contest the
valuation made by the assessor is to protest or file a petition to
the local board of assessment appeals. From the central board of
assessment appeals under Rule 43, the decision of the central
board is brought to the CTA. Then from the CTA it is brought
finally to the SC.
LBAA CBAA CTA SC.
It is also provided that meanwhile, while the controversy is
pending, there is no suspension of the collection of the real
property tax. The real property tax on the basis of what would be
the valuation of the assessor will be the valuation used for the
meantime which will be collected by the local treasurer.
Later on, there is a favorable decision to the taxpayer, then, the
taxpayer will be entitled to the corresponding adjustment
depending upon the outcome of the appeal. The taxpayer may ask
for the crediting of the excess payment or for the refund of
the excess payment. So thats one remedy that we have
encountered in connection with valuation.
Then we go to the collection of the real property tax. We are
done with the assessment process. The job, the work of the
assessor to arrive at a FMV. All these we have the matters
involving appraisal and assessment. Appraisal and assessment is
the final product of these works done by the assessor, the
resulting document is what we call the real property tax
declaration. This is the document which provides the details of
that appraisal and assessment made by the assessor. This
document is brought to the local treasurer because the local
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
treasurer will now compute the real property tax. From that tax
declaration, the local treasurer will find there what is the assess
value of the real property. Having find now the assess value, he
will apply the rate as provided in the ordinance, then the treasurer
will compute the real property tax. Then, the taxpayer pays the
documentation, then, he will issue a receipt for that amount. So
you have here the imposition of real property tax.
So in section 232.
CHAPTER IV
Imposition of Real Property Tax
Sec. 232. Power to Levy Real Property Tax. A province or
city or a municipality within the Metropolitan Manila Area
may levy an annual ad valorem tax on real property such
as land, building, machinery, and other improvement not
hereinafter specifically exempted.
So the real property tax is an ad valorem tax because it is based
on value, what is the value? The assessed value. Remember that,
in the courts of the appraisal and assessment, this is required of
all real property whether taxable or exempt.
The rates, sec. 233.
Sec. 233. Rates of Levy. A province or city or a
municipality within the Metropolitan Area shall fix a
uniform rate of basic real property tax applicable to their
respective localities as follows:
(a) In the case of a province, at the rate not
exceeding one percent (1%) of the assessed
value of real property; and
(b) In the case of a city or municipality within the
Metropolitan Manila Area, at the rate not
exceeding two percent (2%) of the assessed
value of real property.
Now metro manila is composed of different municipalities and
cities. The municipalities there, for as long as they are in the
metro manila area, they could pass an ordinance imposing the levy
of real property tax. Outside the metro manila, only the province
or the cities.
Sec. 234. Exemptions from Real Property Tax. The
following are exempted from payment of the real property
tax:
(a) Real property owned by the Republic of the
Philippines or any of its political subdivisions
except when the beneficial use thereof has been
granted, for consideration or otherwise, to a
taxable person;
(b) Charitable institutions, churches, parsonages or
convents appurtenant thereto, mosques, non-
profit or religious cemeteries and all lands,
buildings, and improvements actually, directly,
and exclusively used for religious, charitable or
educational purposes;
(c) All machineries and equipment that are actually,
directly and exclusively used by local water
districts and government owned or controlled
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corporations engaged in the supply and
distribution of water and/or generation and
transmission of electric power;
(d) All real property owned by duly registered
cooperatives as provided for under R.A. No. 6938;
and
(e) Machinery and equipment used for pollution
control and environmental protection.
Except as provided herein, any exemption from payment
of real property tax previously granted to, or presently
enjoyed by, all persons, whether natural or juridical,
including all government-owned or controlled
corporations are hereby withdrawn upon the effectivity of
this Code.
Under (a), if property of the government is used by somebody
who is not the government, it is not exempt. It must be based on
actual use. Must be used for governmental purposes.
Under (d), it must be registered with the CDA-Cooperative
Development Authority. Those not registered are not covered.
They will be taxable.
Under (e), this is an incentive to those industries, which, by reason
of their activity, would cause pollution. Anything they install for
pollution control would be covered by the exemption.
Then we have the Special Levies.
The real property tax actually is composed of two items:
(1) Basic Real property tax ito yung either on the basis of
1% for province or 2% for cities;
(2) Special Levies this is an additional tax on top of the
basic.
You the Special Levies on Real Property.
One is what we call SEF or the Special Education Fund under Sec.
235.
CHAPTER V
Special Levies on Real Property
Sec. 235. Additional Levy on Real Property for the Special
Education Fund. A province or city, or a municipality
within the Metropolitan Manila Area, may levy and collect
an annual tax of one percent (1%) on the assessed value
of real property which shall be in addition to the basic real
property tax. The proceeds thereof shall exclusively accrue
to the Special Education Fund (SEF).
Take note of the language. It is not, not exceeding unlike in
section 233, at a rate not exceeding 1%. It has to be fixed. In
235, the special levy has a direct imposition of 1% of the real
property. The regular real property tax therefore, consists of the
basic and the SEF. So babayaran mo are 2 types of taxes. The SEF
will be used by the local/public schools. The schools needs like
maintenance and upkeep may be sourced from this 1%.
Another one special levy is the ad valorem tax on idle lands.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Sec. 236. Additional Ad Valorem Tax on Idle Lands. A
province or city, or a municipality within the Metropolitan
Manila Area, may levy an annual tax on idle lands at the
rate not exceeding five percent (5%) of the assessed
value of the property which shall be in addition to the
basic real property tax.
This is on a condition that the real property is idle. The basic, sef,
and the ad valorem tax on idle lands. Who has the burden that it
is an idle land? So you have 237, on what would constitute idle
land.
Sec. 237. Idle Lands, Coverage. For purposes of real
property taxation, idle lands shall include the following:
(a) Agricultural lands, more than one (1) hectare in
area, suitable for cultivation, dairying, inland
fishery, and other agricultural uses, one-half
(1/2) of which remain uncultivated or unimproved
by the owner of the property or person having
legal interest therein. Agricultural lands planted
to permanent or perennial crops with at least fifty
(50) trees to a hectare shall not be considered idle
lands. Lands actually used for grazing purposes
shall likewise not be considered idle lands.
(b) Lands, other than agricultural, located in a city or
municipality, more than one thousand (1,000)
square meters in area one-half (1/2) of which
remain unutilized or unimproved by the owner of
the property or person having legal interest
therein.
Regardless of land area, this Sec. shall likewise apply to
residential lots in subdivisions duly approved by proper
authorities, the ownership of which has been transferred
to individual owners, who shall be liable for the additional
tax: Provided, however, That individual lots of such
subdivisions, the ownership of which has not been
transferred to the buyer shall be considered as part of the
subdivision, and shall be subject to the additional tax
payable by subdivision owner or operator.
Sec. 238. Idle Lands Exempted from Tax. A province or
city or a municipality within the Metropolitan Manila Area
may exempt idle lands from the additional levy by reason
of force majeure, civil disturbance, natural calamity or any
cause or circumstance which physical or legally prevents
the owner of the property or person having legal interest
therein from improving, utilizing or cultivating the same.
Sec. 239. Listing of Idle Lands by the Assessor. The
provincial, city or municipal assessor shall make and keep
an updated record of all idle lands located within his area
of jurisdiction. For purposes of collection, the provincial,
city or municipal assessor shall furnish a copy thereof to
the provincial or city treasurer who shall notify, on the
basis of such record, the owner of the property or person
having legal interest therein of the imposition of the
additional tax.
The third special levy, the special levy by the LGUs.
Sec. 240. Special Levy by Local Government Units. A
province, city or municipality may impose a special levy on
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the lands comprised within its territorial jurisdiction
specially benefited by public works projects or
improvement funded by the local government unit
concerned: Provided, however, That the special levy shall
not exceed sixty percent (60%) of the actual cost of such
projects and improvement, including the costs of acquiring
land and such other real property in connection therewith:
Provided, further, That the special levy shall not apply to
lands exempt from basic real property tax and the
remainder of the land portions of which have been
donated to the local government unit concerned for the
construction of such projects or improvements.
In the fundamentals of taxation, we call this the special
assessment. So this special assessment, we have discussed this in
the principles that this is not tax. It has its own purpose. It
operates only to a certain point or period of time, and you have
sec. 240 as regards the imposition of what this special levy is all
about. The LGU here will undertake a public works project, which
as a result of that project, it benefited real property owners. By
reason of that project, the property owners were benefited by that
project, the LGU can charge against this owners who are benefited
a special levy. Why will the LGU charged them a special levy? The
purpose is to recover the investment, the funding made by the
LGU.
Then we have the enactment of the ordinance under Sec. 241.
Sec. 241. Ordinance Imposing a Special Levy. A tax
ordinance imposing a special levy shall describe with
reasonable accuracy the nature, extent, and location of
the public works projects or improvements to be
undertaken, state the estimated cost thereof, specify the
metes and bounds by monuments and lines and the
number of annual installments for the payment of the
special levy which in no case shall be less than five (5) nor
more than ten (10) years. The sanggunian concerned shall
not be obliged, in the apportionment and computation of
the special levy, to establish a uniform percentage of all
lands subject to the payment of the tax for the entire
district, but it may fix different rates for different parts or
sections thereof, depending on whether such land is more
or less benefited by proposed work.
You could not just charge special levy without a back up. There
must be a local legislation, you have to pass an ordinance. The
special levy is limited only as to time. After that recovery period of
5-10 years, the collection stops.
Sec. 242. Publication of Proposed Ordinance Imposing a
Special Levy. Before the enactment of an ordinance
imposing a special levy, the sanggunian concerned shall
conduct a public hearing thereon; notify in writing the
owners of the real property to be affected or the persons
having legal interest therein as to the date and place
thereof and afford the latter the opportunity to express
their positions or objections relative to the proposed
ordinance.
Sec. 243. Fixing the Amount of Special Levy. The special
levy authorized herein shall be apportioned, computed,
and assessed according to the assessed valuation of the
lands affected as shown by the books of the assessor
concerned, or its current assessed value as fixed by said
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
assessor if the property does not appear of record in his
books. Upon the effectivity of the ordinance imposing
special levy, the assessor concerned shall forthwith
proceed to determine the annual amount of special levy
assessed against each parcel of land comprised within the
area especially benefited and shall send to each landowner
a written notice thereof by mail, personal service or
publication in appropriate cases.
Sec. 244. Taxpayers Remedies Against Special Levy. Any
special levy authorized herein shall be apportioned,
computed, and assessed according to the assessed
valuation of the lands affected as shown by the books of
the assessor concerned, or its current assessed value as
fixed by said assessor if the property does not appear of
record in his books. Upon the effectivity of the ordinance
imposing special levy, the assessor concerned shall
forthwith proceed to determine the annual amount of
special levy assessed against each parcel of land
comprised within the area especially benefited and shall
send to each landowner a written notice thereof by mail,
personal service or publication in appropriate cases.
Sec. 245. Accrual of Special Levy. The special levy shall
accrue on the first day of the quarter next following the
effectivity of the ordinance imposing such levy.
All other matters on real property taxation, the effectivity will be
on January 1 of the following year.
CHAPTER VI
Collection of Real Property Tax
Sec. 246. Date of Accrual of Tax. The real property tax
for any year shall accrue on the first day of January and
from that date it shall constitute a lien on the property
which shall be superior to any other lien, mortgage, or
encumbrance of any kind whatsoever, and shall be
extinguished only upon the payment of the delinquent tax.
Take note that once the tax accrue, it shall constitute as a lien on
the real property. LGU has a lien superior to all other encumbrance
on the property.
Sec. 247. Collection of Tax. The collection of the real
property tax with interest thereon and related expenses,
and the enforcement of the remedies provided for in this
Title or any applicable laws, shall be the responsibility of
the city or municipal treasurer concerned.
The city or municipal treasurer may deputize the barangay
treasurer to collect all taxes on real property located in the
barangay: Provided, That the barangay treasurer is
properly bonded for the purpose: Provided, further, That
the premium on the bond shall be paid by the city or
municipal government concerned.
Sec. 248. Assessor to Furnish Local Treasurer with
Assessment Roll. The provincial, city or municipal
assessor shall prepare and submit to the treasurer of the
local government unit, on or before the thirty-first (31st)
day of December of each year, an assessment roll
containing a list of all persons whose real properties have
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been newly assessed or reassessed and the values of such
properties.
Sec. 249. Notice of Time for Collection of Tax. The city or
municipal treasurer shall, on or before the thirty-first
(31st) day of January each year, in the case of the basic
real property tax and the additional tax for the Special
Education Fund (SEF) or any other date to be prescribed
by the sanggunian concerned in the case of any other tax
levied under this title, post the notice of the dates when
the tax may be paid without interest at a conspicuous and
publicly accessible place at the city or municipal hall. Said
notice shall likewise be published in a newspaper of
general circulation in the locality once a week for two (2)
consecutive weeks.
Sec. 250. Payment of Real Property Taxes in Installments.
The owner of the real property or the person having
legal interest therein may pay the basic real property tax
and the additional tax for Special Education Fund (SEF)
due thereon without interest in four (4) equal installment
to be due and payable on or before March Thirty-first
(31st); the second installment, on or before June Thirty
(30); the Third installment, on or before September Thirty
(30); and the last installment on or before December
Thirty-first (31st), except the special levy the payment of
which shall be governed by ordinance of the sanggunian
concerned.
The date for the payment of any other tax imposed under
this Title without interest shall be prescribed by the
sanggunian concerned.
Payments of real property taxes shall first be applied to
prior years delinquencies, interests, and penalties, if any,
and only after said delinquencies are settled may tax
payments be credited for the current period.
You have the option to either pay it in full or in 4 equal
installments.
Sec. 251. Tax Discount for Advance Prompt Payment. If
the basic real property tax and the additional tax accruing
to the Special Education Fund (SEF) are paid in advance in
accordance with the prescribed schedule of payment as
provided under Sec. 250, the sanggunian concerned may
grant a discount not exceeding twenty percent (20%) of
the annual tax due.
Sec. 252. Payment Under Protest.
(a) No protest shall be entertained unless the
taxpayer first pays the tax. There shall be
annotated on the tax receipts the words paid
under protest. The protest in writing must be
filed within thirty (30) days from payment of the
tax to the provincial, city treasurer or municipal
treasurer, in the case of a municipality within
Metropolitan Manila Area, who shall decide the
protest within sixty (60) days from receipt.
(b) The tax or a portion thereof paid under protest,
shall be held in trust by the treasurer concerned.
(c) In the event that the protest is finally decided in
favor of the taxpayer, the amount or portion of
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
the tax protested shall be refunded to the
protestant, or applied as tax credit against his
existing or future tax liability.
(d) In the event that the protest is denied or upon the
lapse of the sixty day period prescribed in
subparagraph (a), the taxpayer may avail of the
remedies as provided for in Chapter 3, Title II,
Book II of this Code.
Matters involving payment is lodged with the local treasurer. Any
controversy regarding the collection of payment is also lodged with
the local treasurer. Kung magkaroon kayo ng controversy with the
treasurer, your protest will not be entertained unless you first pay.
You should pay under protest. In case your protest is granted, it
will either be credited or refunded. When you protest under real
property tax, you dont go to the regular courts, unlike in local tax,
in real property tax, after passing to the local treasurer, you go to
the board of assessment appeals.
Sec. 253. Repayment of Excessive Collection. When an
assessment of basic real property tax, or any other tax
levied under this Title, is found to be illegal or erroneous
and the tax is accordingly reduced or adjusted, the
taxpayer may file a written claim for refund or credit for
taxes and interests with the provincial or city treasurer
within two (2) years from the date the taxpayer is entitled
to such reduction or adjustment.
The provincial or city treasurer shall decide the claim for
tax refund or credit within sixty (60) days from receipt
thereof. In case the claim for tax refund or credit is
denied, the taxpayer may avail of the remedies as
provided in Chapter 3, Title II, Book II of this Code.
Here, there is no need to pay under protest because you have
discovered that you have excessively paid for your real property
tax.
Sec. 254. Notice of Delinquency in the Payment of the Real
Property Tax.
(a) When the real property tax or any other tax
imposed under this Title becomes delinquent, the
provincial, city or municipal treasurer shall
immediately cause a notice of the delinquency to
be posted at the main hall and in a publicly
accessible and conspicuous place in each
barangay of the local government unit concerned.
The notice of delinquency shall also be published
once a week for two (2) consecutive weeks, in a
newspaper of general circulation in the province,
city, or municipality.
(b) (b) Such notice shall specify the date upon which
the tax became delinquent and shall state that
personal property may be distrained to effect
payment. It shall likewise state that any time
before the distraint of personal property, payment
of the tax with surcharges, interests and penalties
may be made in accordance with the next
following Section, and unless the tax, surcharges
and penalties are paid before the expiration of the
year for which the tax is due except when the
notice of assessment or special levy is contested
administratively or judicially pursuant to the
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provisions of Chapter 3, Title II, Book II of this
Code, the delinquent real property will be sold at
public auction, and the title to the property will be
vested in the purchaser, subject, however, to the
right of the delinquent owner of the property or
any person having legal interest therein to
redeem the property within one (1) year from the
date of sale.
Sec. 255. Interests on Unpaid Real Property Tax. In case
of failure to pay the basic real property tax or any other
tax levied under this Title upon the expiration of the
periods as provided in Section 250, or when due, as the
case may be, shall subject the taxpayer to the payment of
interest at the rate of two percent (2%) per month on the
unpaid amount or a fraction thereof, until the delinquent
tax shall have been fully paid: Provided, however, That in
no case shall the total interest on the unpaid tax or
portion thereof exceed thirty-six (36) months.
Sec. 256. Remedies For The Collection of Real Property
Tax. For the collection of the basic real property tax and
any other tax levied under this Title, the local government
unit concerned may avail of the remedies by
administrative action thru levy on real property or by
judicial action.
Sec. 257. Local Government Lien. The basic real property
tax and any other tax levied under this Title constitutes a
lien on the property subject to tax, superior to all liens,
charges or encumbrances in favor of any person,
irrespective of the owner or possessor thereof,
enforceable by administrative or judicial action, and may
only be extinguished upon payment of the tax and the
related interests and expenses.
Sec. 258. Levy on Real Property. After the expiration of
the time required to pay the basic real property tax or any
other tax levied under this Title, real property subject to
such tax may be levied upon through the issuance of a
warrant on or before, or simultaneously with, the
institution of the civil action for the collection of the
delinquent tax. The provincial or city treasurer, or a
treasurer of a municipality within the Metropolitan Manila
Area, as the case may be, when issuing a warrant of levy
shall prepare a duly authenticated certificate showing the
name of the delinquent owner of the property or person
having legal interest therein, the description of the
property, the amount of the tax due and the interest
thereon. The warrant shall operate with the force of a
legal execution throughout the province, city or a
municipality, within the Metropolitan Manila Area. The
warrant shall be mailed to or served upon the delinquent
owner of the real property or person having legal interest
therein, or in case he is out of the country or cannot be
located, the administrator or occupant of the property. At
the same time, written notice of the levy with the attached
warrant shall be mailed to or served upon the assessor
and the Registrar of Deeds of the province, city or
municipality within the Metropolitan Manila Area where
the property is located, who shall annotate the levy on the
tax declaration and certificate of title of the property,
respectively.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
The levying officer shall submit a report on the levy to the
sanggunian concerned within ten (10) days after receipt of
the warrant by the owner of the property or person having
legal interest therein.
Sec. 259. Penalty for Failure to Issue and Execute
Warrant. Without prejudice to criminal prosecution
under the Revised Penal Code and other applicable laws,
any local treasurer or his deputy who fails to issue or
execute the warrant of levy within one (1) year from the
time the tax becomes delinquent or within thirty (30) days
from the date of the issuance thereof, or who is found
guilty of abusing the exercise thereof in an administrative
or judicial proceeding shall be dismissed from the service.
Sec. 260. Advertisement and Sale. Within thirty (30)
days after service of the warrant of levy, the local
treasurer shall proceed to publicly advertise for sale or
auction the property or a usable portion thereof as may be
necessary to satisfy the tax delinquency and expenses of
sale. The advertisement shall be effected by posting a
notice at the main entrance of the provincial, city or
municipal building, and in a publicly accessible and
conspicuous place in the barangay where the real property
is located, and by publication once a week for two (2)
weeks in a newspaper of general circulation in the
province, city or municipality where the property is
located. The advertisement shall specify the amount of the
delinquent tax, the interest due thereon and expenses of
sale, the date and place of sale, the name of the owner of
the real property or person having legal interest therein,
and a description of the property to be sold. At any time
before the date fixed for the sale, the owner of the real
property or person having legal interest therein may stay
the proceedings by paying the delinquent tax, the interest
due thereon and the expenses of sale. The sale shall be
held either at the main entrance of the provincial, city or
municipal building, or on the property to be sold, or at any
other place as specified in the notice of the sale.
Within thirty (30) days after the sale, the local treasurer or
his deputy shall make a report of the sale to the
sanggunian concerned, and which shall form part of his
records. The local treasurer shall likewise prepare and
deliver to the purchaser a certificate of sale which shall
contain the name of the purchaser, a description of the
property sold, the amount of the delinquent tax, the
interest due thereon, the expenses of sale and a brief
description of the proceedings: Provided, however, That
proceeds of the sale in excess of the delinquent tax, the
interest due thereon, and the expenses of sale shall be
remitted to the owner of the real property or person
having legal interest therein.
The local treasurer may, by ordinance duly approved,
advance an amount sufficient to defray the costs of
collection thru the remedies provided for in this Title,
including the expenses of advertisement and sale.
Section 261. Redemption of Property Sold. - Within one
(1) year from the date of sale, the owner of the delinquent
real property or person having legal interest therein, or his
representative, shall have the right to redeem the property
upon payment to the local treasurer of the amount of the
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delinquent tax, including the interest due thereon, and the
expenses of sale from the date of delinquency to the date
of sale, plus interest of not more than two percent (2%)
per month on the purchase price from the date of sale to
the date of redemption. Such payment shall invalidate the
certificate of sale issued to the purchaser and the owner of
the delinquent real property or person having legal
interest therein shall be entitled to a certificate of
redemption which shall be issued by the local treasurer or
his deputy.
From the date of sale until the expiration of the period of
redemption, the delinquent real property shall remain in
possession of the owner or person having legal interest
therein who shall be entitled to the income and other
fruits thereof.
The local treasurer or his deputy, upon receipt from the
purchaser of the certificate of sale, shall forthwith return
to the latter the entire amount paid by him plus interest of
not more than two percent (2%) per month. Thereafter,
the property shall be free from lien of such delinquent tax,
interest due thereon and expenses of sale.
Section 262. Final Deed to Purchaser. - In case the owner
or person having legal interest fails to redeem the
delinquent property as provided herein, the local treasurer
shall execute a deed conveying to the purchaser said
property, free from lien of the delinquent tax, interest due
thereon and expenses of sale. The deed shall briefly state
the proceedings upon which the validity of the sale rests.
Section 263. Purchase of Property By the Local
Government Units for Want of Bidder. - In case there is no
bidder for the real property advertised for sale as provided
herein, the real property tax and the related interest and
costs of sale the local treasurer conducting the sale shall
purchase the property in behalf of the local government
unit concerned to satisfy the claim and within two (2) days
thereafter shall make a report of his proceedings which
shall be reflected upon the records of his office. It shall be
the duty of the Registrar of Deeds concerned upon
registration with his office of any such declaration of
forfeiture to transfer the title of the forfeited property to
the local government unit concerned without the necessity
of an order from a competent court.
Within one (1) year from the date of such forfeiture, the
taxpayer or any of his representative, may redeem the
property by paying to the local treasurer the full amount
of the real property tax and the related interest and the
costs of sale. If the property is not redeemed as provided
herein, the ownership thereof shall be vested on the local
government unit concerned.
Section 264. Resale of Real Estate Taken for Taxes, Fees,
or Charges. - The sanggunian concerned may, by
ordinance duly approved, and upon notice of not less than
twenty (20) days, sell and dispose of the real property
acquired under the preceding section at public auction.
The proceeds of the sale shall accrue to the general fund
of the local government unit concerned.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
Section 265. Further Distraint or Levy. - Levy may be
repeated if necessary until the full amount due, including
all expenses, is collected.
Section 266. Collection of Real Property Tax Through the
Courts. - The local government unit concerned may
enforce the collection of the basic real property tax or any
other tax levied under this Title by civil action in any court
of competent jurisdiction. The civil action shall be filed by
the local treasurer within the period prescribed in Section
270 of this Code.
Section 267. Action Assailing Validity of Tax Sale. - No
court shall entertain any action assailing the validity or
any sale at public auction of real property or rights therein
under this Title until the taxpayer shall have deposited
with the court the amount for which the real property was
sold, together with interest of two percent (2%) per
month from the date of sale to the time of the institution
of the action. The amount so deposited shall be paid to the
purchaser at the auction sale if the deed is declared invalid
but it shall be returned to the depositor if the action fails.
Neither shall any court declare a sale at public auction
invalid by reason or irregularities or informalities in the
proceedings unless the substantive rights of the
delinquent owner of the real property or the person having
legal interest therein have been impaired.
There are instances where the property owner was not able to
know that his property was sold by reason of delinquency. So he
could file an action to assail the validity of the tax sale. There are
also jurisdictional requirements under 267. Failure to comply with
the deposit requirement then the action will be dismissed because
this is a mandatory requirement. If the person assailing is a
tax-exempt person, 267 will not apply. But if the person
assailing is not a tax-exempt person, then he must comply
with 267.
Section 268. Payment of Delinquent Taxes on Property
Subject of Controversy. - In any action involving the
ownership or possession of, or succession to, real
property, the court may, motu propio or upon
representation of the provincial, city, or municipal
treasurer or his deputy, award such ownership,
possession, or succession to any party to the action upon
payment to the court of the taxes with interest due on the
property and all other costs that may have accrued,
subject to the final outcome of the action.
So there are instances where two or more persons are claiming
the same property. Two or more of them would sue each other
before the court claiming rights over the property and they would
show that they have a tax declaration. Can ownership be awarded
to the person who has a tax declaration and has paid? Under 268,
the local treasurer will always be happy to accept all these
payment. Bahala na yung court magdetermine kung sino ang true
owner ng property. Later on, others may claim for a refund or
credit if they are not the awardee.
Section 269. Treasurer to Certify Delinquencies Remaining
Uncollected. - The provincial, city or municipal treasurer or
their deputies shall prepare a certified list of all real
property tax delinquencies which remained uncollected or
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unpaid for at least one (1) year in his jurisdiction, and a
statement of the reason or reasons for such non-collection
or non-payment, and shall submit the same to the
sanggunian concerned on or before December thirty-first
(31st) of the year immediately succeeding the year in
which the delinquencies were incurred, with a request for
assistance in the enforcement of the remedies for
collection provided herein.
This is the problem of most LGUs kasi hindi lahat nagbabayad ng
tax.
Section 270. Periods Within Which To Collect Real
Property Taxes. - The basic real property tax and any other
tax levied under this Title shall be collected within five (5)
years from the date they become due. No action for the
collection of the tax, whether administrative or judicial,
shall be instituted after the expiration of such period. In
case of fraud or intent to evade payment of the tax, such
action may be instituted for the collection of the same
within ten (10) years from the discovery of such fraud or
intent to evade payment.
The period of prescription within which to collect shall be
suspended for the time during which:
(1) The local treasurer is legally prevented from collecting
the tax;
(2) The owner of the property or the person having legal
interest therein requests for reinvestigation and executes
a waiver in writing before the expiration of the period
within which to collect; and
(3) The owner of the property or the person having legal
interest therein is out of the country or otherwise cannot
be located.
In 270, you would notice that there is no such thing as assessment
by the treasurer unlike in local tax.
CHAPTER VII
Disposition of Proceeds
Section 271. Distribution of Proceeds. - The proceeds of
the basic real property tax, including interest thereon, and
proceeds from the use, lease or disposition, sale or
redemption of property acquired at a public auction in
accordance with the provisions of this Title by the
province or city or a municipality within the Metropolitan
Manila Area shall be distributed as follows:
(a) In the case of provinces:
(1) Province - Thirty-five percent (35%) shall accrue to
the general fund;
(2) Municipality - Forty percent (40%) to the general fund
of the municipality where the property is located; and
(3) Barangay - Twenty-five percent (25%) shall accrue to
the barangay where the property is located.
Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil
(b) In the case of cities:
(1) City - Seventy percent (70%) shall accrue to the
general fund of the city; and
(2) Thirty percent (30%) shall be distributed among the
component barangays of the cities where the property is
located in the following manner:
(i) Fifty percent (50%) shall accrue to the barangay where
the property is located;
(ii) Fifty percent (50%) shall accrue equally to all
component barangays of the city; and
(c) In the case of a municipality within the Metropolitan
Manila Area:
(1) Metropolitan Manila Authority - Thirty-five percent
(35%) shall accrue to the general fund of the authority;
(2) Municipality - Thirty-five percent (35% shall accrue to
the general fund of the municipality where the property is
located;
(3) Barangays - Thirty percent (30%) shall be distributed
among the component barangays of the municipality
where the property is located in the following manner:
(i) Fifty percent (50%) shall accrue to the barangay where
the property is located;
(ii) Fifty percent (50%) shall accrue equally to all
component barangays of the municipality.
(d) The share of each barangay shall be released, without
need of any further action, directly to the barangay
treasurer on a quarterly basis within five (5) days after the
end of each quarter and shall not be subject to any lien or
holdback for whatever purpose.
Section 272. Application of Proceeds of the Additional One
Percent SEF Tax. - The proceeds from the additional one
percent (1%) tax on real property accruing to the Special
Education Fund (SEF) shall be automatically released to
the local school boards: Provided, That, in case of
provinces, the proceeds shall be divided equally between
the provincial and municipal school boards: Provided,
however, That the proceeds shall be allocated for the
operation and maintenance of public schools, construction
and repair of school buildings, facilities and equipment,
educational research, purchase of books and periodicals,
and sports development as determined and approved by
the Local School Board.
Section 273. Proceeds of the Tax on Idle Lands. - The
proceeds of the additional real property tax on idle lands
shall accrue to the respective general fund of the province
or city where the land is located. In the case of a
municipality within the Metropolitan Manila Area, the
proceeds shall accrue equally to the Metropolitan Manila
Authority and the municipality where the land is located.
Page 84
 TRANSCRIPTIONS ON TAXATION LAW II
From the Lectures of Dean Atty. Manuel Quibod, CPA
III Manresa 2014 - 2015

Section 274. Proceeds of the Special Levy. - The proceeds Section 280. Fees in Court Actions. - All court actions,
of the special levy on lands benefited by public works, criminal or civil, instituted at the instance of the
projects and other improvements shall accrue to the provincial, city or municipal treasurer or assessor under
general fund of the local government unit which financed the provisions of this Code, shall be exempt from the
such public works, projects or other improvements. payment of court and sheriff's fees.

CHAPTER VIII Section 281. Fees in Registration of Papers or Documents

Special Provisions
Section 275. General Assessment Revision; Expenses
Incident Thereto. - The sanggunian of provinces, cities and
municipalities within the Metropolitan Manila Area shall
provide the necessary appropriations to defray the
expenses incident to the general revision of real property
assessment.
All expenses incident to a general revision of real property
assessment shall, by ordinance of the sangguniang
panlalawigan, be apportioned between the province and
the municipality on the basis of the taxable area of the
municipality concerned.
Section 276. Condonation or Reduction of Real Property
Tax and Interest. - In case of a general failure of crops or
substantial decrease in the price of agricultural or
agribased products, or calamity in any province, city or
municipality, the sanggunian concerned, by ordinance
passed prior to the first (1st) day of January of any year
and upon recommendation of the Local Disaster
Coordinating Council, may condone or reduce, wholly or
partially, the taxes and interest thereon for the succeeding
year or years in the city or municipality affected by the
calamity.
on Sale of Delinquent Real Property to Province, City or
Municipality. - All certificates, documents, and papers
covering the sale of delinquent property to the province,
city or municipality, if registered in the Registry of
Property, shall be exempt from the documentary stamp
tax and registration fees.
Section 282. Real Property Assessment Notices or Owner's
Copies of Tax Declarations to be Exempt from Postal
Charges or Fees. - All real property assessment notices or
owner's copies of tax declaration sent through the mails
by the assessor shall be exempt from the payment of
postal charges or fees.
Section 283. Sale and Forfeiture Before Effectivity of
Code. - Tax delinquencies incurred, and sales and
forfeitures of delinquent real property effected, before the
effectivity of this Code shall be governed by the provisions
of applicable laws then in force.

Now there are instances where the collection of real property tax
is suspended or there is condonation or reduction of the real
property tax. One power is exercise by the LGU (276), the other
by the President (277). This is shared power by the LGU and the
President.

Section 277. Condonation or Reduction of Tax by the

President of the Philippines. - The President of the
Philippines may, when public interest so requires, condone
or reduce the real property tax and interest for any year in
any province or city or a municipality within the
Metropolitan Manila Area.

Section 278. Duty of Registrar of Deeds and Notaries

Public to Assist the Provincial, City or Municipal Assessor. -
It shall be the duty of the Registrar of Deeds and notaries
public to furnish the provincial, city or municipal assessor
with copies of all contracts selling, transferring, or
otherwise conveying, leasing, or mortgaging real property
received by, or acknowledged before them.

Section 279. Insurance Companies to Furnish

Information. - Insurance companies are hereby required
to furnish the provincial, city or municipal assessor copies
of any contract or policy insurance on buildings,
structures, and improvements insured by them or such
other documents which may be necessary for the proper
assessment thereof.

Transcribed by: Alabastro, Datukon, Juyo, Salmite, Villamil Page 85